June 16, 1999
HERNDON, Virginia (CNN) -- The makers of Divx, a rentable DVD system, announced Wednesday they will stop marketing the video-rental alternative but registered customers will be able to view discs for the next two years.
"The majority of customers purchasing DVD players in Circuit City stores have selected players that include the Divx option," said Richard L. Sharp, chief executive officer of Digital Video Express and Circuit City Stores, the majority partner in the venture.
"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."
Divx was billed as an alternative to video rentals by letting customers rent its format of digital video discs without having to return them to stores. However, the format failed to get much support from film or other electronics retailers, leading to losses.
Circuit City Stores suffered an after-tax loss of $114 million related to the disposal of the Divx business. The loss includes provisions for commitments under licensing agreements with motion picture distributors, lease termination costs, employee severance and other contractual commitments.
Digital Video Express will provide a $100 cash rebate to all consumers who bought Divx-enhanced players before Wednesday. Rebate forms will be available at 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-featured player than they would have paid for the least expensive, comparable DVD player available at the time of their purchase, Sharp said.
All Divx discs can be viewed on registered players anytime between now and June 30, 2001, Sharp said.
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