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Divx treads on DVD's turf
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September 12, 1997: 3:13 p.m. ET
Newer digital technology could render VHS and DVD obsolete
From Correspondent Casey Wian
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NEW YORK (CNNfn) - Uncertainty spread through the home video industry this week when Digital Video Express announced a limited-play, cheaper version of DVD technology called Divx.
Digital video discs, higher in quality and more compact than record album-sized laser discs, have been touted as the home medium of choice for the 21st century. But just as VHS beat Beta into extinction in the early 1980s, Divx could render the DVD and VHS technologies obsolete.
Standard DVD's sell for $20 to $25. With no rental market for these discs, customers used to rental prices may suffer from sticker shock.
A single Divx disc will sell for approximately $5 for a 48-hour play period after which the disc is locked through encryption. But consumers will have the option of paying for additional viewings or buying the disc outright.
"The consumer is voting that we like to rent this product," said Digital Video Express Chairman Richard Sharp. (164K WAV) or (164K AIFF)
Divx machines will sell for about 100 dollars more than DVD players, which range from $400 to $1,000.
Standard DVD hit the market in seven cities in March and went national in August. Already, more than 400,000 discs have been sold and about 180,000 players shipped.
Skeptics say there is no real need for the newer Divx technology.
"It doesn't offer anything new to the consumer except higher costs," said Jeffrey Eves, president of the Video Software Dealers Association.(153K WAV) or (153K AIFF)
The success of both formats depends heavily on acceptance by Hollywood studios. Warner Brothers and Sony are backing DVD, while Universal, Paramount and Dreamworks are behind Divx. Disney is hedging its bet by supporting both formats.
"I think there is a real opportunity for stalling the market development by confusing the consumer," said Warner Home Video President Warren Lieberfarb.
The battle will begin in earnest next summer when Divx players and discs will be available in stores.
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