DivX 7 H.264 Software Expected to Carry 10 to 20 percent Premium
The first DivX Version 7-equipped CE products will ship in late 2009 with its H.264 software, as the company expands use of the compression technology, executives told analysts. “Golden master” copies of the software are expected to be released in November and development kits to arrive the next month, CEO Kevin Hell said.
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DivX Version 7 is the first major release stemming from the $22 million acquisition of MainConcept, which specializes in H.264 software. Unlike proprietary DivX video compression technology, H.264 is an open standard that can deliver 720p and 1080p at half the bit rate of MPEG-4 Part 2.
Created as an option for the DivX platform at MainConcept’s engineering offices in Tomsk, Russia, the software won’t replace the company’s proprietary software, but probably will be licensed as a premium to it, Hell said. DivX will shoot for a 30 to 50 percent premium, but likely land at 10 to 20 percent, he said. The company is redesigning its Web site to highlight DivX-7.
DivX also wants to expand the base of products using its compression technology. DivX had a 44 percent installed base in global DVD players Q3 and has made inroads with Blu-ray. About 60 models of Blu-ray players, including 42 certified in Q3, contain its technology. They include Denon, Marantz, Panasonic and Philips models in the U.S. It has a 26 percent installed base in Blu-ray players in Europe, Hell said. The corresponding number for the U.S. wasn’t disclosed. DivX officials weren’t available for comment Friday.
The new compression software will be branded DivX-7, but products with it will carry the DivX Plus logo, Hell said. DivX certifies products at its San Diego headquarters, and may open more offices, company officials said. With the advent of BD-Live, DivX may be able get royalties for Version 7 and its DivX Connected digital networking platform, Hell said. DivX has announced only DivX Connected agreements with D-Link and Hauppauge Digital. D-Link’s media player shipped in Europe in November 2007 and arrived in the U.S. this year.
DivX has certified 116 digital TVs, including 38 LG Electronics models, Hell said. LG, which accounted for 10 percent of DivX’s $24.4 million in Q3 revenue, has contacted the company regarding a license for MPEG-4 patents that LG owns (CED Aug 15 p2).
DivX officials declined to say when they expect to start reaping revenue from deals with Sony Pictures TV International and Warner Bros. to deliver DivX-compatible titles for online retail download. DivX paid Sony $1 million. The company has a distribution deal with CinemaNow and hopes to get a share of customer acquisition revenue when the download movie service starts delivering DivX-capable films, Hell said. The deals with Sony and Warner may not produce much revenue, but will help the company renew licenses with hardware partners, Hell said. Several licensees have extended their deals two or three years, he said.
DivX Q3 net income grew to $3.2 million from $816,000 a year ago as revenue rose to $24.4 million from $21.8 million. Technology and licensing revenue rose 12 percent and accounted for 63 percent of total revenue, Halvorson said. Sales to Yahoo, which puts DivX technology in its toolbar, represented 21 percent of Q3 revenue. DivX revised its forecast for fiscal 2008 earnings to 58 to 60 cents from 52 to 60 cents and narrowed its revenue projection to $97 million to $100 million from $95 million to $100 million. - Mark Seavy