HERNDON, Va., June 16 /PRNewswire,
with additional reporting by Gordon Brockhouse -- One of the most
reviled formats in consumer electronics industry has bitten the dust.
Digital Video Express, LP announced today that it will cease marketing
of the Divx home video system and discontinue operations, but existing,
registered customers will be able to view discs during a two-year
Digital Video Express had planned to
bring the pay-per-view DVD-based format to Canada later this year.
But the format never took off in the U.S., despite a strong effort
from Circuit City Stores, Inc., the largest consumer electronics retailer
in the U.S. and the majority partner in Digital Video Express. Since
Divx was never sold in Canada, Canadian consumers are unaffected by
the format's failure.
"Sales at participating Divx retailers
reflect strong consumer interest in the Divx feature," said Richard
L. Sharp, chairman and chief executive officer of Digital Video Express
and of Circuit City Stores. "The majority of customers purchasing
DVD players in Circuit City stores have selected players that include
the Divx option. Unfortunately, we have been unable to obtain adequate
support from studios and other retailers. Despite the significant
consumer enthusiasm, we cannot create a viable business without support
in these essential areas."
For American Divx buyers, Digital Video
Express will provide a US$100 cash rebate on purchases of Divx players
made prior to June 16, 1999. Rebate forms will be available at http://www.divx.com,
participating retailers and by calling 1-888-639-DIVX. The rebate
will ensure that no Divx customers have paid more for the Divx player
than they would have paid for the least expensive, comparable DVD
player available at the time of their purchase. All Divx-featured
DVD players are fully functional DVD players and will continue to
operate as such. All Divx discs, including those previously purchased
by consumers and those remaining in retailer inventories, can be viewed
on registered players anytime between now and June 30, 2001. Subsequent
viewings also will be available during that period. Discs can no longer
be upgraded to unlimited viewing, known as Divx Silver. Customers
who have converted discs to Divx Silver can continue viewing the discs
until June 30, 2001, or can receive a full refund of the conversion
price at their request. Divx expects to provide registered owners
with written notification of the details related to the system phase-out.
Effective today, Divx will no longer register new customers.
"We want to thank all our existing
Divx customers and regret that this decision was necessary," Sharp
said. "We hope to work closely with all Divx retailers and customers
to ensure that the closure process is as simple as possible."
Circuit City Stores, Inc. is incurring
an after-tax loss of US$114.0 million related to the disposal of the
Divx business. The loss includes provisions for commitments under
licensing agreements with motion picture distributors, the write down
of assets to net realizable value, lease termination cost, employee
severance and benefit cost and other contractual commitments.