After their weak release in the two test markets San Francisco, CA and Richmont, VA, DIVX has obviously received another serious slap in the face today by retail chain Sears, Roebuck & Co. as reported by “Stereophile Guide To Home Theater”. DIVX is a pay-per-view DVD variant that has received much negative response since its initial announcement shortly after the introduction of DVD in the market last year, mostly due to its incompatibility to the original DVD format and its dubious business model, which is directed to cut out retail level in order to create better profits for DIVX and its licensees, while directly monitoring and storing the viewing habits of its customers through a phone line connected to the player.
Today however, “Sears” have announced that they will not carry DIVX in any of their affiliated chain stores, putting more pressure on the already shaky DIVX business model. Disgruntled shareholders in DIVX, which is mostly owned by Circuit City, are more and more concerned about the immense expenses of the company and the failure to establish the brand in the market despite the huge $100 mio marketing campaigns to launch the platform. Also having guaranteed $112 mio to studios in licensing fees does not make things easier for DIVX and Circuit City CEO Richard Sharp, as costs are sky-rocketing and the public refuses to buy into the technology. Even hardware vendors have reportedly started to back away from the format, and slowly the question arises, what happens to people who have already bought DIVX players and movies, in case the company goes out of business and shareholders refuse to further support the format?