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DivX, LLC (; also formerly known as DivXNetworks, Inc. and DiVX, Inc.) is a privately held American video technology company based in
San Diego San Diego ( , ) is a city on the Pacific coast of Southern California, adjacent to the Mexico–United States border. With a population of over 1.4 million, it is the List of United States cities by population, eighth-most populous city in t ...
,
California California () is a U.S. state, state in the Western United States that lies on the West Coast of the United States, Pacific Coast. It borders Oregon to the north, Nevada and Arizona to the east, and shares Mexico–United States border, an ...
. DivX, LLC is best known for creating the
DivX DIVX (Digital Video Express) is a discontinued digital video format. Created in part by Circuit City, it was an unsuccessful attempt to create an alternative to video rental in the United States. The format's poor reception from consumers resu ...
family of digital video
codecs A codec is a computer hardware or software component that encodes or decodes a data stream or signal. ''Codec'' is a portmanteau of coder/decoder. In electronic communications, an endec is a device that acts as both an encoder and a decoder o ...
. The company's software has been downloaded over 1 billion times since January 2003. The DivX codecs include the namesake
MPEG-4 Part 2 MPEG-4 Part 2, MPEG-4 Visual (formally International Organization for Standardization, ISO/International Electrotechnical Commission, IEC 14496-2) is a video encoding specification designed by the Moving Picture Experts Group (MPEG). It belongs to ...
-based codec, the H.264/MPEG-4 AVC DivX Plus codec and the
High Efficiency Video Coding High Efficiency Video Coding (HEVC), also known as H.265 and MPEG-H Part 2, is a video compression standard designed as part of the MPEG-H project as a successor to the widely used Advanced Video Coding (AVC, H.264, or MPEG-4 Part 10). In compa ...
DivX HEVC Ultra HD codec. DivX, LLC's offerings have expanded beyond the codec to include software for viewing and authoring DivX-encoded video. DivX, LLC also licenses its technologies to manufacturers of
consumer electronics Consumer electronics, also known as home electronics, are electronic devices intended for everyday household use. Consumer electronics include those used for entertainment, Communication, communications, and recreation. Historically, these prod ...
devices and components used in these devices, of which over 1 billion DivX-enabled devices have shipped worldwide. DivX certifies that these licensed products are able to properly play DivX-encoded video.


History

The origin of DivX, Inc. began with video engineer Jérôme Rota (aka Gej), who made the original "DivX ;-)" codec available on his personal website after he had reverse-engineered the
Microsoft Microsoft Corporation is an American multinational corporation and technology company, technology conglomerate headquartered in Redmond, Washington. Founded in 1975, the company became influential in the History of personal computers#The ear ...
MPEG-4 V3 codec. Gej was looking for a way to compress his portfolio so he could transmit it using the
Audio Video Interleave Audio Video Interleave (also Audio Video Interleaved and known by its initials and filename extension AVI, usually pronounced ) is a proprietary multimedia container format and Windows standard introduced by Microsoft in November 1992 as p ...
file format (AVI). The codec became popular because it enabled reasonable quality video transmission over the internet (see
DivX DIVX (Digital Video Express) is a discontinued digital video format. Created in part by Circuit City, it was an unsuccessful attempt to create an alternative to video rental in the United States. The format's poor reception from consumers resu ...
). Co-founder Jordan Greenhall, a former Mp3.com executive, learned of the codec from friends, and used it to download a copy of "The Matrix". Greenhall eventually got in touch with Gej through an underground Dutch hacker group after a multi-month search. In early 2000, Greenhall put forward the idea of using the "DivX ;-)" codec to found a company. With co-founders Joe Bezdek, Darrius Thompson and, Greenhall and Gej created DivXNetworks, Inc. After coming under scrutiny for the original "DivX ;-)" codec, which was not a clean room design codec, DivXNetworks created a new, clean room codec. In 2005, the company was renamed DivX, Inc. The company incurred net losses from its creation through the second quarter of 2005. The company was profitable for fiscal years 2005–07. DivX, Inc. went public on September 27, 2006. It was listed on
NASDAQ The Nasdaq Stock Market (; National Association of Securities Dealers Automated Quotations) is an American stock exchange based in New York City. It is the most active stock trading venue in the U.S. by volume, and ranked second on the list ...
under the ticker symbol DIVX. In December 2006, DivX, Inc. was added to the Russell 2000 and Russell 3000 Indexes. In November 2007, DivX bought MainConcept AG, a specialist provider of video and audio codec solutions. In October 2010,
Sonic Solutions Sonic Solutions was an American computer software company headquartered in Novato, California. In addition to having a number of offices in the U.S., the company also maintained offices in Europe and Asia. It was acquired by Rovi Corporation in 2 ...
completed their acquisition of DivX. In February 2011,
Rovi Corporation TiVo Corporation, formerly known as the Rovi Corporation and Macrovision Solutions Corporation, was an American technology company headquartered in San Jose, California. Now operating as Xperi, the company is primarily involved in licensing ...
acquired Sonic Solutions (including the DivX business). In April 2014,
Rovi Corporation TiVo Corporation, formerly known as the Rovi Corporation and Macrovision Solutions Corporation, was an American technology company headquartered in San Jose, California. Now operating as Xperi, the company is primarily involved in licensing ...
sold the DivX and MainConcept business to Parallax Capital Partners and StepStone Group. In February 2015,
NeuLion Endeavor Streaming is a multinational digital video distribution and streaming company. Based in New York City, the company works with professional sports leagues and entertainment companies to distribute live and on-demand content. It also off ...
, Inc. acquired DivX, LLC. In February 2018, a deal was finalized to sell certain DivX assets, intellectual property and subsidiaries from NeuLion, Inc. to
Fortress Investment Group Fortress Investment Group, LLC is an American investment management firm based in New York City. It was founded as a private equity firm in 1998 by Wes Edens, Rob Kauffman, Pete Briger, Michael Novogratz, and Randal Nardone. Overview When ...
.


Revenue streams

DivX, LLC licenses its technologies to manufacturers of consumer electronic devices. DivX, LLC also licenses its technologies to manufacturers of integrated circuits designed to be used in consumer electronic devices. For example, on September 12, 2007, DivX, Inc. announced a licensing agreement with
Qualcomm Qualcomm Incorporated () is an American multinational corporation headquartered in San Diego, California, and Delaware General Corporation Law, incorporated in Delaware. It creates semiconductors, software and services related to wireless techn ...
that allows the chip manufacturer to include DivX, Inc.'s technology in its video-enabled chipsets. In addition to licensing, DivX, Inc. also certifies devices that can encode and/or play-back videos using the company's codec according to DivX, Inc.'s standards. The company has certified DVD players, digital televisions, digital cameras, portable video players, and portable video recorders. DivX, Inc.'s partners have shipped over 1 billion certified consumer electronic devices, representing over 2500 product models. Partners include
LG Electronics LG Electronics Inc. () is a South Korean Multinational corporation, multinational major appliance and consumer electronics corporation headquartered in Yeouido-dong, Seoul, South Korea. LG Electronics is a part of LG, LG Corporation, the fourth ...
, Philips Electronics,
Samsung Electronics Samsung Electronics Co., Ltd. (SEC; stylized as SΛMSUNG; ) is a South Korean multinational major appliance and consumer electronics corporation founded on 13 January 1969 and headquartered in Yeongtong District, Suwon, South Korea. It is curr ...
, and Sony Electronics. The licensing and certification agreements that DivX, Inc. strikes with its partners usually entitle DivX, Inc. to receive a per-unit royalty for every device shipped that incorporates DivX, Inc.'s technology and is certified by DivX, Inc. Approximately 75% of all royalties DivX, Inc. received are for products sold in countries outside of the United States, as DivX-encoded video is more popular in certain regions outside of the United States than it is in the United States. Royalties resulting from licensing are approximately $1 to $2 per unit shipped. Prior to November 2007, DivX, Inc. also received revenue from
Google Google LLC (, ) is an American multinational corporation and technology company focusing on online advertising, search engine technology, cloud computing, computer software, quantum computing, e-commerce, consumer electronics, and artificial ...
by providing the option to download the Google Toolbar when downloading the DivX Player from the company's website. In November 2007, DivX, Inc.'s contract with Google expired, and the company started distributing a co-branded version of the Yahoo! Toolbar and a version of
Internet Explorer 7 Windows Internet Explorer 7 (IE7) (codenamed Rincon) is a version of Internet Explorer, a web browser for Windows. It was released by Microsoft on October 18, 2006. It was the first major update to the browser since 2001. It does not support ve ...
that was pre-configured with Yahoo! tools. DivX Inc.'s financial reporting for the third quarter of 2008 indicated that the Yahoo! deal was proving to be more lucrative than the previous Google deal. Soon after the company reported third quarter results, however, Yahoo! advised DivX, Inc. that it would cease making payments under the contract. DivX, Inc. responded by suing Yahoo! in California Superior Court seeking damages and specific performance of the contract. The company acknowledged, though, that its breach of the prior contract would materially affect its financial performance for 2008 and 2009. (In the first nine months of 2008, the Yahoo! deal accounted for 21% of DivX, Inc.'s revenue.) DivX, Inc. and Yahoo! settled their dispute in August 2009. Under the settlement, Yahoo! paid $9.5 million to DivX, Inc. In March, 2009, DivX, Inc. entered into a new promotion and distribution agreement with Google. Under the agreement DivX, Inc. would distribute Google products such as the Chrome browser and Google Toolbar along with its own products and would receive fees from Google for successful activations of these products.


Stage6

Stage 6 was a user-generated content site run by DivX, Inc. that was similar to
YouTube YouTube is an American social media and online video sharing platform owned by Google. YouTube was founded on February 14, 2005, by Steve Chen, Chad Hurley, and Jawed Karim who were three former employees of PayPal. Headquartered in ...
but that allowed for uploading and viewing of high-definition video. Anyone could upload a video to Stage6 and make it available for viewing for free. All videos on Stage6 were playable on all consumer electronics devices that DivX had certified as being capable of playing DivX encoded video. Stage6 contributed to divx.com becoming one of the top 200 most-visited websites according to the site Alexa.com.. Stage6 received a "Very Good" rating from PC World Magazine.. On September 6, 2007, DivX, Inc. filed a
declaratory judgment A declaratory judgment, also called a declaration, is the legal determination of a court that resolves legal uncertainty for the litigants. It is a form of legally binding preventive by which a party involved in an actual or possible legal ma ...
action in federal district court in San Diego against
Universal Music Group Universal Music Group N.V. (often abbreviated as UMG and referred to as Universal Music Group or Universal Music) is a Netherlands, Dutch–United States, American multinational Music industry, music corporation under Law of the Netherlands, ...
, Inc.. In the lawsuit, DivX, Inc. sought a declaration from the court that DivX Inc.'s operation of Stage6 fell within the safe harbor protection provided by the
Digital Millennium Copyright Act The Digital Millennium Copyright Act (DMCA) is a 1998 United States copyright law that implements two 1996 treaties of the World Intellectual Property Organization (WIPO). It criminalizes production and dissemination of technology, devices, or ...
for hosting websites against claims of copyright infringement. Previously, UMG had demanded that DivX, Inc. take a license from the company to cover works on Stage6 that it owned and, in addition, pay UMG $30 million for past damages.. On October 16, 2007, UMG filed an action against DivX, Inc. in federal district court in Los Angeles for copyright infringement. UMG then moved to have the San Diego action dismissed in favor of the Los Angeles action. On February 5, 2008, the judge in the San Diego action granted UMG's motion to dismiss. On July 24, 2007, DivX, Inc. announced that it intended to separate Stage6 into its own separate private company because Stage6's success has resulted in significant expenses that have impacted DivX, Inc.'s bottom line. In December 2007, DivX, Inc. announced that it needed additional time to consider the alternatives available to the company with respect to the future of Stage6.. On February 25, 2008, DivX, Inc. announced its plan to permanently shut down Stage6 on February 28, 2008, instead of selling it or spinning it off. Prior to the decision to close the site, disagreements within DivX, Inc. on what to do with site appears to have led to the resignations of senior personnel, including co-founders Jordan Greenhall and Darrius Thompson.


Acquisitions and investments

In August 2007, DivX, Inc. announced that it had acquired the assets of Veatros, LLC, a Lawrence, Kansas-based company. Veatros developed video processing technology at the
University of Kansas The University of Kansas (KU) is a public research university with its main campus in Lawrence, Kansas, United States. Two branch campuses are in the Kansas City metropolitan area on the Kansas side: the university's medical school and hospital ...
' Information and Telecommunication Technology Center. The technology can be used for video search and discovery. The deal was for $2 million in cash plus an additional $2.5 million upon completion of certain technology-related milestones. In November 2007, DivX, Inc. purchased Aachen, Germany based MainConcept AG. DivX, Inc. paid $22 million for the company, and will pay up to additional $6 million upon the completion of certain milestones in 2008. MainConcept developed and distributes one of the most popular codecs using the H.264 standard.


Awards

* DivX, Inc. was selected as a Top 100 Private Company Award Winner 2006 by OnHollywood. * DivX, Inc. was ranked No. 1 in Entrepreneur Magazine's Hot 500 list for 2007. * DivX, Inc. was awarded Deloitte's elite Technology Fast 500 award 2007–2009.


References


External links


DivX, Inc. web site

DivX, Inc. SEC filings
*
Background on DivX, Inc. IPO from Seeking Alpha


* {{webarchive , url=http://webarchive.loc.gov/all/20020914163417/http://www.projectmayo.com/ , title=Project Mayo , date=2002-09-14 Software companies established in 1999 Technology companies based in San Diego Software companies based in California Defunct software companies of the United States 1999 establishments in California