DivX reported their 1st quarter earnings on Monday and while I’m still waiting to read the actual 10k before digging too far into the numbers, I did want to comment on what I see as a significant shift in strategy. Over the last 7 years, DivX has done an impressive job of building an eco-system around a single file format. The first time that I came across a DivX file, I actually thought that it was some kind of a virus. It took me two weeks before I worked up the courage to download the DivX media player so that I could play the movie, but once I did, I realized that my fears were unfounded. The file not only offered a superior video experience, but it was a lot smaller than the MPEG files that I was used to downloading. Since I was on a dial-up connection at the time, every little byte made a big difference.

As the P2P networks developed, DivX and it’s open source cousin XviD, became an important resource for file sharers. Initially, my own interest in DivX was driven by it’s technological advantages over other video formats, as well as the wide availability of DivX content on the grey market, but as compression technology has evolved, my reasons for using DivX have changed as well. Since I’m no longer on a dial-up network, compression is less important then what I can actually do with my videos.

As DivX gained in popularity, they were able to forge agreements with consumer electronic manufacturers that allowed you to play DivX files on a wide range of devices. Even though, H.264 is a superior standard for internet video, I still prefer DivX files because I know that I’ll be able to play them on the hardware devices that I own.By creating an eco-system that supports portability, DivX has been able to lock me into their format in the same way that Apple has been able to use iTunes to keep their customers buying iPods instead of MP3 players.

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Just when you thought it was safe to salvage your Moviebeam box for spare parts, there’s new hope on the horizon that Moviebeam may once again be coming to a television screen near you. Like a zombie from a bad horror flick, Moviebeam continues to rise from the dead feasting on the rotted brains of media moguls and venture capitalists with each new incarnation.

According to the Daily Bankruptcy Review, Movie Gallery has asked for bankruptcy court approval to sell their VOD service to Dar Capital Limited at a $2.25 million price tag.

Movie Gallery pulled the plug on its-on-demand movie service, called MovieBeam, in December as part of its restructuring under Chapter 11 protection. Dar Capital Limited has agreed to buy MovieBeam, which had about 1,800 subscribers at the time it was shut down. The service required customers to purchase a television set-top box that allowed them to order films for between $1.99 and $4.99. Movie Gallery said in court papers filed Thursday that it began shopping the MovieBeam business soon after shuttering the service and that 14 parties showed an interest in the company. Dar Capital is picking up MovieBeam’s remaining assets, which include certain trademarks and intellectual property associated with the business.

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Over the past few days buzz has been building over the possible launch of a Stage6 clone. According to the DivxIT.net website, a Stage6 “alternative/clone� will be revealed on April 29th. If this is true, it would be an exciting development for fans who still crave the high quality Stage6 experience.

This isn’t the first time that someone has tried to hype the launch of a Stage6 replacement. As soon as Stage6 announced their shut down, there was a flurry of fake Stage6 clone announcements. Most of those sites fizzled out before they even got started.

NewStage6.com was the first “replacement� to pop up on my radar. Initially they had a timer counting down until their launch, but today, the site is all but empty. Highlol.com was another website that tried to create buzz around the Stage6 collapse. They promised free HD DivX downloads, but there still aren’t any videos on the site today.

Having already been burned a couple of times, you can understand why I tend to be skeptical about these sorts of promises. With DivX Inc. having come out and denied any affiliation with the site, I can’t help but wonder how far they will let this get before they try to shut it down. On the other hand, because DivX benefits from having more of their content out there, maybe they are really better off ignoring it. Still, if DivxIT does gain traction, DivX might not be so happy about someone copying their site, especially when they don’t seem willing to sell it to begin with. If DivX does try to go the hostile route, I think that they may be up against more than they realize.

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Over the past week, I’ve spent a lot of time thinking about DivX’s decision to close down Stage6. When I first heard the news, I wasn’t sure how to feel about the decision. On one hand, I believe strongly in the free market system and when DivX choose to go public, they took on an obligation to look after their shareholder interests.

By turning to the public, DivX was able to raise more than $140 million in cash from investors who believed in the future of the company. Having access to this kind of capital opened a lot of doors for DivX, but it also came with strings attached. While it’s easy to blame DivX’s insiders for pulling the plug, without their initial support, DivX never would have been able to create Stage6 to begin with. I disagree with the final decision to shut the site down, but I can at least understand the economic realities that drove the decision to remove Stage6 from the core business.

On another hand, I was a fan of DivX long before their IPO and a loyal member of the Stage6 community. Without DivX’s community, they never would have succeeded in the first place and to abandon their fans over corporate profits speaks volumes about the priorities behind the decision makers at the helm of the company. While the cold hearted capitalist in me has no moral high ground to stand on, the fan in me can’t help but be heartbroken by the realization that DivX may have lost their soul in the course of going public. (more…)

The RIAA may have given up on trying to outlaw DVRs, but that hasn’t stopped them from trying to interfere with your legal right to record content. And when it comes to recording radio, they’ve drawn a line in the sand. Whether its their lawsuit against XM Satellite radio or Creative’s decision to remove FM recording from their MP3 products, there are plenty of examples where the RIAA has used heavy handed tactics to try and stifle innovation.

The RIAA may have been worried about RadioShark, but it was the radio piranhas that were the real threat. While they were busy suing their partners, the open source movement has been filling the stream ripping wake that corporations are now too afraid to touch. By taking such a strong stance against legitimate companies, they RIAA has driven digital recording underground where they’ve now lost all control over it.

Stream ripping software isn’t new, but the functionality has been relatively limited and the interfaces haven’t been ready for the typical user. Screamer Radio is an excellent open source solution for DVR radio, but it lacks the aesthetic appeal and scheduling features that make traditional DVRs so easy to use.

Luckily, the open source community has been hard at work and what Screamer Radio leaves out, RaimaRadio is now bringing to the table. Raima Radio is a powerful freeware program that fuses features like wishlists, program scheduling, and video support with the traditional features of most stream ripping software. (more…)

With access to four tuners and 1.5 terrabytes of storage, I thought that I had the ultimate DVR setup. However, after seeing Snapstream’s Enterprise PC DVR in action, I’m envious of its capabilities and my home entertainment system suddenly seems wimpy. I don’t know how much Snapstream is charging, but if money grew on trees, I’d be all over this in a heartbeat.

With 10 tuners, one won’t worry about programming conflicts. And with 2 terrabytes of storage, it would mean that one can record 10 different channels, 24 hours a day for at least 8 days before worrying about archiving. Even, if one needed to save old content, the software enables video backup onto DVD.

While the specs had me drooling, the search capabilities were what I found most impressive. By taking advantage of the closed captioning system, SnapStream is able to search the transcripts of any program you record. This allows you to record a lot of junk and filter it for the information that you care about. Unlike the DVR in your living room, this isn’t limited to one monitor. SnapStream has designed the DVR to act as a server, allowing multiple users to search and stream videos from anywhere on a network.

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While digging through the US patent website, I noticed that IBM has filed an application to place non-skippable DVD commercial advertisements. It’s hard for to believe that there isn’t prior art for this already but, according to the application, commercials can either be updated via the internet or they can be embedded directly on the disc:

A method wherein contents of DVDs may be restricted based upon purchased certificates is provided. The certificates allow for secured information on playback. Specifically, whenever a DVD is to be played, a certificate is consulted to determine whether the content of the DVD should be played with or without commercial interruptions. If the certificates provide for commercial interruptions, then commercials can be obtained from an online service that renders commercials on demand, or from the DVD itself. In such a case, the content of the DVD may be interspersed with commercials.

I’m usually a fan of new DVD technology, but I’ve got mixed feelings about this one. Every now and then, I’ll come across a DVD that won’t let me skip past the previews and it drives me absolutely nuts. If I’ve already paid for my content, then should I be forced to watch advertisements? It makes me feel like the studios are double dipping.

On the other hand, I could see plenty of advantages in ad- upported DVDs. There are lots people who aren’t willing to pay money to watch a DVD. If they can catch up on a series by dealing with the ads, then this technology could introduce time shifting to an entirely new audience. It could also open up new distribution channels to content providers. For example, if McDonalds included ad supported Disney flicks into their Happy Meals, I wager that they’d reach more viewers than Friday nights on ABC.

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DivX followed their earnings report with a JP Morgan conference presentation. Having just undergone their quarterly confessional, I didn’t expect to hear any new information.

Luckily, I was rewarded midway through the Q&A session. JP Morgan analyst Paul Coster coyly probed Kevin Hell regarding DivX support on the Xbox 360. The question seemed to catch Hell off guard and, while his initial reaction was enthusiasm, there was something in his tone suggesting that Coster was on target.

Below is the exchange verbatim. However, to fully appreciate the awkwardness of the exchange, I suggest listening in at the 24 minute mark and determine for yourself if you hear a sense of urgency in Hell’s response.

Just a minor point here, but there was a recent Microsoft conference where I believe their media extender now incorporates the DivX codec on it, is that correct? Can you confirm that and does that mean we’re soon going to see Xboxes with DivX on them?

Yes! that, uh, we’re in discussions with Microsoft on that at this point in time, so I can’t go into any great detail on that. Um that is not a certified, that is not a certified or licensed product at this time.

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