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September 18, 1997updated 03 Sep 2016 7:15pm

CIRCUIT CITY VENTURE CREATES DVIX PAY-PER-VIEW RIVAL TO DVD

By CBR Staff Writer

If going out to rent a video is just too much of an effort then being obliged to take it back the following morning is a complete drag. That’s why consumer electronics industry giants such as Matsushita Electric Industrial Co’s Panasonic, Thomson SA and Zenith are rallying round yet another strain of DVD, this one called Digital Video Express, or Dvix, which should enable viewers to pay a rental-like price of under $5 for a cheap strain of disposable disk. The pay-per-view Dvix technology has been developed by a venture between Richmond, Virginia electronics company Circuit City Stores Inc and Los Angeles entertainment law firm Siffren, Brittenhyanm, Branca & Fischer. Each coughed-up $30m to develop Dvix; Circuit City just announced it would pump a further $100m into the development – giving a 66% stake. The consumer electronics companies which have licensed the design are expected to debut test systems next spring and roll them out nationally next summer. But wait a minute, isn’t there already a standard for DVD movie disks. Yes. And are the two compatible? Of course not. A Dvix player will cost around $100 more than existing DVD players, which won’t play Dvix disks, although Dvix players will play regular DVDs. So why are they doing it? Because Dvix employs the ‘uncrackable’ Triple Data Encryption Standard preventing data (movies) from being copied on to other disks – the piracy deterrent was said to key to winning licensees – and supports a billing system similar to Digital Satellite System where a low-speed built-in modem calls a central server during off-peak hours to report player activity which is stored on 1Mb flash RAM. DVD can’t unscramble Dvix and therefore can’t play the disks even though the data quality and resolution are identical. Triple DES may preclude vendors selling systems outside of the US under the country’s encryption export laws. The price of buying a disk from a store – rather than renting a VHS tape includes a two day viewing period after which the disc’s contents are locked out. A user could pay via the modem for the disk to be unlocked again or buy the disc outright for about $20. Conventional DVD assumes users will shell out $25 to own a movie.

Scared

Circuit City’s belief is that users would rather rent a movie, citing the 3.7bn annual video rental market versus the 600 million videos sold annually, but without the hassle of the traditional VHS format. (But how are they going to squeeze on all those pictures and descriptions which make us reach for a video jacket?). It says it’ll have 100 titles out next summer for the launch, 500 within a year of introduction. Circuit City says it’s talked to around a dozen hardware manufacturers, though only three have signed up to build devices. Hollywood studios Walt Disney Co, Seagram Co’s Universal Pictures, Dreamworks SKG and Viacom Inc’s Paramount Pictures are committed to Dvix. Existing DVD player manufacturers, like Sony, Pioneer and Toshiba haven’t signed up for Dvix, scared they will lose revenue as customers delay buying their new digital home theaters until the Divx players and discs go on sale next spring. Likewise, retailers are said to divided over whether to support Dvix. Those that have most to lose – software and video rental chains – see Dvix as a threat. Circuit City claims that while existing DVD players are confined to playing movie disks, Dvix players have 90% of the components need to adapt a player for internet browsing or shopping on the web.

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