Divx Will Try Widescreen; Dow Stereo Signs On

Next month, Divx is planning to test the widescreen waters. The company behind the pay-per-view alternative to "open" DVD recently announced that two films will be released in the widescreen format in December. "We want to see how much demand there is among our customers for widescreen," says a company spokesman.

The lack of widescreen has been one of many objections raised by home-theater enthusiasts against Circuit City's venture. If the initial offerings are well received, Divx is likely to issue more titles for widescreen viewing. Currently, all Divx titles are formatted to fit the 4:3 aspect ratio of "legacy" TV.

Despite scaling back its Divx promotional budget, Circuit City is still running full-page ads in major newspapers nationwide. The ads offer five free Divx discs (a $25 value) with the purchase of any Divx player. Approximately 200 titles are available on Divx, as compared to more than 2000 in the open format.

The promotional campaign might be paying some dividends for the Richmond, Virginia-based mass merchandiser. On November 21, San Diego-based Dow Stereo-Video became a Divx dealer. The electronics retailer had not jumped on board with the format when it first debuted, but it conducted focus groups and surveys for several months among its customers before making the commitment.

The much-publicized battle between Divx and open DVD was not a point of major concern among Dow's customers, management concluded. According to Dow spokesman Tom Campbell, "We came to the conclusion that Divx is a feature set, not a conflicting format, and the price difference is so minimal that there is no reason not to have it."

Campbell points out that RCA's $399 Divx player has a full set of features, "including DTS capability and 24-bit/96 kHz audio DACs. Divx becomes just one more feature in the package." The player is a good value, he insists, "even if the buyer never purchases a single Divx disc."

Dow will pump its own money into promoting Divx. Campbell notes that his company is not taking an uncalculated risk. "We looked at Divx with a jaundiced eye for a long time," he says, "but we have come to the conclusion that Divx will help, not hurt, the entire DVD category." Dow currently carries the top 25 DVD movie titles and will soon double that number. Campbell claims that stores have room for both Divx and open DVD.

Dow Stereo-Video is the latest electronics outlet to sign on with Divx. In addition to Circuit City's many stores, other dealers include Denver-based Ultimate Electronics, California's The Good Guys, New York's 6th Avenue Electronics, and approximately 50 RCA-authorized outlets throughout the country.

Cahners In-Stat Group, a high-technology market-research firm, recently completed a study on holiday sales of DVD players. According to the study, shipments of both DVD and Divx players will rise dramatically near the end of 1998, with as many as 351,000 DVD players shipping this quarter; 20% of those will be Divx players. The total represents a 160% increase over the number of players shipped during the fourth quarter last year. Contributing to the format's gain in popularity are declining prices for players, a wider choice of movie titles, and higher-quality audio and video outputs.

However, this popularity will have to grow substantially larger before Sony Corporation gets involved with Divx. A recent statement by Sony Electronics president Teruaki Aoki confirmed once again that the consumer-electronics giant has no plans to support Divx, primarily because the company feels that introducing a different type of DVD player could create consumer confusion. According to Sony, launching Divx would make more sense when "a comfortable market size" is achieved---something Aoki defined as an "installed base of 10 million DVD players in homes." DVD has not yet reached 10% of that figure.