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Rival to roil DVD market

The pay-per-view subformat known as Divx will scare off the DVD home video market throughout the new year and beyond, according to a new report.

The pay-per-view subformat known as Divx will scare off the DVD home video market throughout the new year and beyond, according to a new report.

The installed base of DVD video players will grow at a

U.S. Installed base of DVD hardware, in millions
Year Video Players PCs
1997 0.2 0.3
1998 0.7 2.4
1999 1.4 6.7
2000 2.3 13
2001 3.6 19.5
Source: Yankee Group
snail's pace through 2001, trailing the penetration of DVD drives in personal computers, predicts a Yankee Group study entitled "DVD: A Format Under Fire." The two categories, comparable in 1997 at a few hundred thousand each, will diverge wildly by 2001, with 3.6 million DVD video players installed compared to 19.5 million DVD drives in PCs.

The report blames consumer confusion over formats for the stunted home digital video player market.

"The promise of universal compatibility between brands, platforms, and applications was originally a key selling point for DVD," said Yankee Group program manager James Penhune in a statement. "But the emergence of Divx and several proprietary versions of recordable DVD are undermining this advantage and giving consumers a reason to postpone purchasing the product."

As a result, the market for DVD home video largely will be confined to so-called "early adopters" while mainstream consumers wait for the dust surrounding standards and formats to settle.

Divx is a format that requires consumers to purchase an encrypted disc that works for 48 hours--an additional fee is required for repeated viewing. Divx players can also play standard discs.

The format has attracted the interest of some studios that believe Divx will offer better protection against video piracy than standard DVD. But many consumers have reacted to the yet-to-be-released format with hostility.

Divx is scheduled for release this summer.

On the PC front, consumers are expected to buy millions of DVD-equipped PCs as manufacturers start to include them as a matter of course in all but lower-end machines as a replacement for CD-ROM drives. Consumers are likely to be encouraged by the fact that they can still use their compact discs and CD-ROMs on their new DVD players. However, the advent of recordable and rewriteable DVDs has created heated standards battles on the PC front as well.

Japanese manufacturers such as NEC and Sony are pursuing separate technologies not compatible with the rewriteable format touted by the DVD Forum, called DVD-RAM (random access memory). Rival technologies include DVD-R (recordable), DVD-R/W, and DVD-R+W (recordable and rewriteable).