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DVD owners dis Divx

Owners of DVD players are up in arms over news that the Divx format could make current DVD hardware obsolete.

Owners of DVD players are up in arms over news that some consumer electronics companies, retailers, and movie studios will join forces to promote a digital content format that could make current DVD hardware obsolete.

Thomson Consumer Electronics and Zenith (ZE) will make DVD players by mid-1998 that play special discs using technology from Divx.

The technology, developed with $100 million in financial backing from retail giant Circuit City (CC), lets users bring home a disc for an expected price of around $5 and view a movie. The Divx technology is being positioned not as a direct competitor to DVD but as one that adds additional capability to DVD.

The estimated 150,000 DVD players already sold can't play Divx discs, although a Divx player will be able to view DVD-Video discs. According to Divx, older players can't be upgraded, either. Consumers are fuming that their new equipment may become obsolete and are wondering whether Divx will slow the sales of DVD titles as new consumers ponder which format to buy.

"The consumer will be confused by DVD versus Divx--having two different DVD discs is inherently confusing. You certainly cannot expect salespeople to explain it to them, as it is salespeople who are undereducated about DVD...What the film studios and Circuit City want is the money that the video rental houses make," says one reader in an email to CNET's NEWS.COM.

"When are they [movie studios and the consumer electronics industry] going to wake up and try and work together to introduce a logical value-add media upgrade and then sit back and rake in the revenue? They seem to be shooting themselves in the foot" with Divx, agrees David Card, an analyst with International Data Corporation.

"If DVD doesn't happen this Christmas, it's probably not going to happen. Some other technology might come along and replace it," predicts Card.

Says one reader, Everett Garnett, "There are literally thousands of people like myself that are fuming because we've invested several hundreds (in some cases thousands) of dollars in this new format," Garnett said. "I fully expected to replace my current player one day as features were added to the specs. However, to get hit below the belt like this really makes you fearful of ever being an early adopter again," he noted.

"It seems as if Disney and others are trying to convert it [DVD] into a way to continue to milk money from people." He feels there will be "an unfavorable opinion of DVD after a few people get enormous bills because their kids loved watching Disney films."

Ironically, while the new format may hinder sales in the upcoming and all-important Christmas season, Divx might not even fly by the time it is ready for market.

One reason is that the Divx format's more sophisticated means of "renewing" and even selling rented titles may be unpopular with consumers. If a viewer wants to continue to watch the movie after expiration of the 48-hour rental period (which begins when the disc is played for the first time), the playback unit connects via modem to a central database and makes charges to an account for each viewing.

The user can also buy the disc outright by having it charged to the account, but the disc could only be used on one Divx player. If someone used another player to watch a movie they purchased, they would be charged another one-time fee.

Further, specialty video retailers may balk at carrying Divx discs because they will represent additional inventory, Card says. Potentially, stores could be stocking not only DVD-Video titles but also Divx rental titles and Divx Gold titles. (Divx Gold titles will be sold for unlimited use, just as DVD titles are.) The potential confusion among retailers regarding how to juggle Divx and DVD merchandise might not be worth the money the movie studios or consumer electronics firms might make.