DivX, LLC
| Company type | Private |
|---|---|
| Industry | Video technology |
| Founded | 2000 |
| Headquarters | San Diego, California, USA |
Key people | Kevin Hell Jerome "Gej" Vashisht-Rota |
| Products | DivX Software for Windows, DivX Pro for Windows, DivX Software for Mac, DivX Pro for Mac |
| Website | www.divx.com |
DivX, LLC (; previously known as DivXNetworks, Inc. and DiVX, Inc.) is a privately owned American firm specializing in video technology, headquartered in San Diego, California. The company is widely recognized for creating the DivX series of digital video codecs, which have been downloaded over one billion times since 2003.
Its product lineup includes the MPEG-4 Part 2-based codec, the H.264/MPEG-4 AVC DivX Plus codec, and the HEVC DivX HEVC Ultra HD codec. Additionally, DivX provides software solutions for both playback and authoring of videos encoded with DivX technology. The company licenses its codec technologies to manufacturers of consumer electronics; globally, more than one billion devices equipped with DivX have been shipped. To ensure interoperability, DivX certifies these products for codec compatibility.
History
The origins of DivX trace back to video engineer Jérôme Rota (also known as Gej), who reverse-engineered Microsoft's MPEG-4 V3 codec to develop the initial "DivX ;-)" codec. This innovation enabled efficient video compression suitable for internet distribution through AVI files. Jordan Greenhall, a former Mp3.com executive and business strategist, discovered this codec and partnered with Rota and others to establish DivXNetworks, Inc. in 2000. Following legal challenges concerning the original codec's architecture, the company created a clean room implementation to protect its business foundation.
In 2005, the firm rebranded as DivX, Inc., shifting from early net losses to profitability during fiscal years 2005–07. The company went public on September 27, 2006, listing on NASDAQ under the symbol DIVX and was subsequently included in the Russell 2000 and Russell 3000 indexes by year-end.
DivX broadened its capabilities in November 2007 by acquiring MainConcept AG, a developer specializing in video and audio codec technologies, thereby expanding its product range and market presence.
Sonic Solutions acquired DivX in October 2010; shortly thereafter, in February 2011, Rovi Corporation purchased Sonic Solutions, incorporating DivX into its global portfolio. In April 2014, Rovi divested DivX and MainConcept to private equity investors Parallax Capital Partners and StepStone Group.
In February 2015, NeuLion, Inc. acquired DivX to enhance its online video platform offerings. Subsequently, in February 2018, NeuLion sold selected DivX assets and intellectual property rights to Fortress Investment Group.
This progression reflects strategic leadership decisions aimed at maximizing DivX’s core technologies across various markets and platforms within the competitive landscape of video technology.
Revenue streams
DivX, LLC generates revenue primarily through licensing its technology to manufacturers of consumer electronics and integrated circuits. A notable agreement was secured in 2007 with Qualcomm for embedding DivX technology into video-capable chipsets.
In addition to licensing fees, DivX certifies devices that support encoding or playback using its codecs—including DVD players, digital televisions, cameras, and portable media players. Over 1 billion certified devices spanning more than 2,500 product models have been shipped by partners such as LG Electronics, Philips, Samsung Electronics, and Sony Electronics.
Typically, licensing and certification contracts yield royalties on a per-unit basis ranging from $1 to $2 per device shipped. Approximately three-quarters of these royalties originate from international markets where demand for DivX-encoded content is stronger than in the United States.
Prior to November 2007, DivX earned income through a partnership with Google by bundling the Google Toolbar with its media player downloads. After that agreement ended, DivX transitioned to distributing versions co-branded with Yahoo! Toolbar and Internet Explorer 7 preloaded with Yahoo! services. Initially, this Yahoo! partnership generated higher revenues compared to the previous Google deal.
However, when Yahoo! ceased payments under their contract terms, DivX initiated legal action seeking damages and enforcement of the agreement. This breach significantly affected DivX’s financial results during 2008 and 2009; notably, revenue from the Yahoo! deal accounted for 21% of total income in the first nine months of 2008. The dispute was resolved in August 2009 when Yahoo! agreed to pay $9.5 million to DivX.
In March 2009, DivX entered a new promotional and distribution arrangement with Google to bundle Google products such as Chrome and Google Toolbar alongside its own software offerings—earning fees based on successful activations.
Stage6
Stage6 was a content-sharing platform managed by DivX, Inc., resembling YouTube but with an emphasis on high-definition video content. It provided users the ability to upload and watch videos at no cost, compatible with DivX-certified consumer electronics. Stage6 contributed significantly to divx.com achieving a ranking within the top 200 most frequented websites according to Alexa.com and received a "Very Good" evaluation from PC World Magazine.
On September 6, 2007, DivX initiated a declaratory judgment lawsuit against Universal Music Group, requesting judicial confirmation that Stage6 was shielded under the Digital Millennium Copyright Act safe harbor clauses for hosting user content. UMG had sought a licensing deal in addition to $30 million in damages concerning copyrighted material present on Stage6. Subsequently, UMG filed a separate copyright infringement case in Los Angeles, which resulted in the dismissal of DivX’s San Diego lawsuit by February 2008.
The rapid expansion of Stage6 led to considerable operational costs that adversely affected DivX’s financial results. Consequently, in July 2007, DivX announced intentions to spin off Stage6 into an independent private company. Nevertheless, by December 2007, the company extended its review period to explore various strategic alternatives for Stage6’s future.
On February 25, 2008, DivX officially announced the permanent closure of Stage6 effective February 28, abandoning any plans for divestiture or spin-off. Disputes regarding the platform’s strategic direction contributed to the departure of several senior executives, including co-founders Jordan Greenhall and Darrius Thompson, underscoring leadership and strategic challenges during this stage.
Acquisitions and investments
In August 2007, DivX, Inc. acquired Veatros, LLC’s assets, a Lawrence, Kansas-based firm specializing in video processing innovations developed at the University of Kansas’ Information and Telecommunication Technology Center. This acquisition enhanced DivX’s capabilities in video search and discovery. The transaction involved an initial cash payment of $2 million with up to $2.5 million more contingent upon reaching defined technology milestones.
In November 2007, DivX completed the acquisition of MainConcept AG, headquartered in Aachen, Germany, for $22 million plus an additional $6 million dependent on milestone achievements during 2008. MainConcept is recognized as a premier provider of H.264 codec solutions, substantially reinforcing DivX’s product lineup and competitive standing within video compression technologies.
Awards
- OnHollywood honored DivX, Inc. as one of its Top 100 Private Companies in 2006.
- Entrepreneur Magazine ranked DivX as the fastest-growing business at No. 1 on its Hot 500 list in 2007.
- From 2007 through 2009, DivX earned Deloitte’s Technology Fast 500 award consecutively for its swift growth and significant impact on the technology sector.