Site created 12/15/97.
page created: 1/15/99
Divx president Paul Brindze
Friday, January 8th
the private demonstration of the Thomson / Divx high definition
system, I had the opportunity to speak one-on-one with Divx
president Paul Brindze, and conduct a brief interview. Based on
feedback from our readers, and my own concerns, I asked him about as
many of the issues that avid DVD consumers find troubling about Divx
as possible. The following is a slightly-edited (for length)
transcript of the interview.
Bill Hunt (The Digital Bits):
The 87,000 players that your press release indicates as being sold
to consumers... does that include players in the hands of studio and
industry participants, the press, Divx and Circuit City employees
and so forth?
Paul Brindze (Divx): That's
sold to consumers. Of course, some consumers include employees,
because we don't give the players free to our employees. It's also
definitely not a shipped number. You always hear numbers, shipped
into retail. To be clear, we [Divx-equipped players] are included in
the CEMA numbers shipped into retail. They don't break that out.
Hunt: How many total Divx
players have shipped thus far, as opposed to the number sold?
Brindze: I don't have the
specific number. I believe Thomson has shipped over 100,000. As for
others, everybody did phenomenal - I mean, everyone did run out at
the end of the year. As you may know, Thomson has announced that
they're putting in another line, because they simply couldn't keep
up with demand.
I will tell you this - what Warren [Lieberfarb] tried to say on the
panel is demonstrably untrue. The idea that, "everybody wanted
DVD, and when we ran out of DVD players, there were all these Divx
players... so everybody bought them, but didn't really want Divx."
That is untrue - and I'm very thankful that Keating from Good Guys,
who is kind of the neutral party in this game - put it straight.
They ran out of the Divx players first. It's not like people wanted
DVD and couldn't find one. If you talk to any of the retailers out
there, you will find out that everybody ran out of the low-priced
machines, the $299 giveaway machines, and they ran out of the
highest-end machines, the top, top Sonys. What they didn't run out
of, were the ones comparably priced to the Divx machines. People did
not run out of the $400 to $500 machines... except the Divx models.
Hunt: Let's talk about the
number of accounts - the number of registered Divx players. In the
panel discussion, Larry Pesce from Thomson himself indicated that,
according to their research, not everyone who purchased a Divx
player intended to use the feature right away. So what is the rate
Brindze: This is what Rick was
trying to say. From the time we started selling to the public back
in June, we noticed a lag in registrations. And frankly, I could go
back and give you anecdotal reasons why the lag exists. For example,
my sister and her husband purchased a Divx player, and they're not
technical people, so they had to have someone come out and install
the wiring, and they had a carpenter come out to enlarge the
cabinet. So a good three weeks passed before they registered. I
don't know how many people there are out there like that, but there
are certainly people like that. There are others who need to get a
phone cord put in the right place.
What we discovered, is that the more players we sold, larger the
number of unregistered players got. But it's just a factor of the
increased sales curve. When you go back to the earliest people who
purchased the players, and we've done this several times, you
discover that the number of unregistered players after three weeks
or a month is basically negligible. On the other hand, if we started
telling people numbers of currently unregistered players, when we've
just sold half the players in the last two weeks, people would jump
on that, and say, "Ah, ha!" We know it's a big number, but
somewhere around three or four weeks it starts to disappear.
And then we've got a certain number of people who don't want the
player, for whatever reason - who bring it back. We don't know if
it's they don't want Divx, or they don't want DVD, or they really
wanted a camcorder instead. By the way, the returns are no higher
for Divx players than for any other consumer electronics device. But
as you know, normal is in the range of 10 to 15%. So those people
Hunt: But certainly, there
must be some people, as the Thomson research indicated, that may try
the Divx feature once or twice, and then not rent again for a long
time, or just may not use it at all...
Brindze: Well, that's not what
our research indicates. As Rick mentioned, we phoned a random
selection of Divx owners - this was done for us by Centris, by the
way, an independent research group - and they took a sample of some
600 - 700 people that had owned their Divx players for 4 to 6 weeks.
And what we found is that those people bought 11 Divx discs in that
time, and about 4 basic DVDs. Now, of course, any individual could
be all one or all the other. But on average, they're using both
pieces of product.
Hunt: For clarification, the
number of Divx discs sold - 535,000 - does that include the 5 free
titles in your rebate program?
Brindze: Yeah, the way it
worked is that they got to pick 5 titles that they wanted in the
store, when they bought the player, and they took those home. And
I'll be blatant on my pitch - when you get your 5 free movies, under
the Warner Bros approach, they're the 5 free movies that Warner has
enough of to decide that that's what you want to watch. You have no
choice in the titles. We're the freedom of choice guys. With Divx,
you take 5 movies of the shelf at random, pay for them, take them
home, and then you send in the rebate program and get the refund. I
have zero idea how many of those titles are in the 535,000, but
that's included though. That's why it's important to say that in the
4 to 6 weeks, we know it's 11, because we know that those people at
least went out and got 6 more, after the 5 they took home with the
Hunt: One of the big concerns
my readers have talked about, is that there have been a significant
number of sales "horror stories", for lack of a better
word, on Circuit City sales floors. For example, consumers will go
into the stores, and the signage that indicates some studios support
DVD and some only support Divx is still up, so that they...
Brindze: Is still up now?
Hunt: Yeah. I just experienced
this myself at a Los Angeles-area store not three weeks ago. And you
have to take the sales people over and show them, "We'll if
your sign is right, why is this DreamWorks DVD here, and this Fox
DVD...?" And there's also cases where sales representatives
will, certainly not necessarily deliberately, will misrepresent DVD
or Divx in the effort to sell the Divx feature. For example, they'll
say that, "Titanic is
gonna be exclusive on Divx." Things like that have been a
source of irritation and ill will with avid DVD consumers - these
are people who know when they're being told something that's
Brindze: All I can tell you is
that the Circuit City headquarters doesn't think this is happening -
these things should be brought to the store manager's attention.
Clearly, the sales people shouldn't be doing that. I will tell you
that we had the opposite experience - you know, Circuit City shops
its competitors. And at those stores, individual sales people would
say things that were just flatly untrue about Divx - how terrible
Divx was, that we're gonna watch everything that you watch, and
we'll publish your viewing habits all over the Internet. And of
course, we only record Divx disc activity on the players, and we
keep that secret. I'm just saying that there's been a lot of that
going around. I mean, I can't blame Toshiba, for every open DVD
salesman that misrepresents Divx...
Hunt: So maybe it speaks to
the level of salesperson experience in general, all around...?
Brindze: Right. Unfortunately.
When we get this kiosk in stores, there will hopefully be less of
Hunt: There was a recent issue
with a web site, called ProDivx.com...
Brindze: I personally haven't
Hunt: Well, it claimed to be a
fan site, but the overall look was clearly corporate - the images
and sales pitch looked as if they came right out of a Divx sales
brochure - having seen your brochures and sales materials myself.
And some clever folks on the Internet did a little digging, and
found out that the webmaster - his name is Mark Patton - lives
within a mile of Circuit City and Divx's corporate headquarters in
Richmond. There are also lots of spam posts on the DVD newsgroups
lately, from pro-Divx individuals claiming to be fans, while their
comments read like a Divx sales pitch, almost line for line. And
there's been a lot of speculation that this is an organized effort
by Divx employees, to promote Divx on-line, and to counter the
widespread hostility toward Divx on the Internet...
Brindze: Well, it is not an
organized effort. There is only one official Divx web site, and
that's Divx.com. Period, end of story. We have had people come and
say, "I'm tired of all this negative stuff. I'd like to do my
thing and get your word out." And if they ask us to link, or
they ask us to provide material, we'd be idiots not to. I mean, if
they come to us and say, "I'd like to do a description of Divx
the way you want it said," we'd be silly not to take them up on
it. I mean, we're a business trying to promote ourselves.
We don't encourage or authorize our employees to represent Divx on
the Internet. It is possible that some of these people are going
after the negative DVD folks on their own, and we can't stop that. I
mean, if you worked for a company, and read a lot of negative and
false stuff about your company on the Internet, wouldn't you speak
up? That's only natural. In fact, I'd be willing to bet that that's
probably going on. But we aren't organizing any sort of effort. And
to my knowledge, Mark Patton is not an employee of, or affiliated
with, Circuit City or Divx.
Hunt: One other major area of
irritation for DVD fans, and this is perhaps their biggest concern,
is that certain studios seem to favor Divx over DVD when releasing
some titles. Buena Vista, for example, has released quite a number
of its Miramax titles to Divx, that the studio will likely not
release to DVD for some time. And what's worse, the open DVD version
of Armageddon, for example,
which was just released, doesn't have the anamorphic widescreen
feature, which is extremely important to the early adopters, while
the Divx widescreen version IS anamorphic for widescreen TVs. How
would you address these concerns?
Brindze: Well certainly, we
don't attempt to obtain exclusive titles. The titles that the
studios choose to release on each format are entirely up to them. We
don't have that kind of power to determine what they do - I wish we
did! Honestly, we would like nothing more than for all of the
studios to release their titles day-and-date on both Divx and DVD,
and let the consumers decide which they wanted. So, I think that a
lot of the anger that's directed against us [Divx] is misplaced.
But I also think that if there's anyone that your readers should be
upset at, it's the people who sold the DVD format on false
pretenses. This idea that consumers would be able to buy all their
favorite movies on DVD, from all of the studios, with all the
extras, for $20 - consumers like your readers were sold a bill of
goods, in my opinion. This is a real issue for me - the people who
sold DVD knew, even as they made these claims, that their
counterparts at the other studios weren't going to go for that.
And I will tell you, because I don't want you to get away and hear
this, and think, "Those guys have done me again!" We do
not encourage what I'm about to say at all, but you should know that
there are a few studios already who are thinking about a rental
window for DVD. As a business. And what that means, is that they're
gonna have DVDs that may come out at the time you want, but they're
gonna have SRPs of like $40 and $50. They're not gonna be the $100
like cassettes, because it's not a big enough audience yet. But then
4 months or 6 months later, it'll drop down to the sell-through
price, just like it does on VHS. And that's again, nothing to do
with us. That's just what we're hearing - and they [the studios]
haven't decided yet. But they're concerned about DVD cannibalizing
their VHS market. Look, if you sell Blockbuster a DVD at $15
wholesale, and they can turn around and rent it 15 or 20 times...
the more popular DVD gets, the more pressure on this issue there is.
The bad news for your customers, is gonna be that the guy who wants
to buy it right off the bat, is gonna be pressured up on the price.
And he's gonna get pissed at some point, because of the way
expectations have been built up with DVD.
As for the Armageddon issue,
all I can tell you is that our technical person who deals with the
studios on our end, and gathers the materials from them, he wants
the quality of the Divx disc to be as good as possible. So if he's
told that we're doing a widescreen version of a title - you know we
do some research and try to see what consumers are asking for. So if
he can get anamorphic elements, that's how he wants to do it, so
that the Divx version is as good as it can be in terms of quality.
Now, as for the studio - Buena Vista - we don't have any influence
on what their policy is in terms of what features they choose to put
on their DVDs. We just try to make our product as good as possible.
Hunt: Changing subjects a bit,
what about additional financial partners for the Divx venture? Are
there any parties that have expressed interest? Clearly, you've been
Brindze: Of course, we're
talking and working on this, but there's no one specific yet.
Hunt: Are there any plans in
the works to take Divx into international markets?
Brindze: Yes. The key here is
that you need international partners, who understand their own
markets, to be effective. We're working on this, definitely.
Hunt: Does the U.S. Government
restriction on the export of encryption technology have any effect
on these plans?
Brindze: Well, yes... but we
already have the first level of approval from the government.
They're actually pretty easy. The key is that Divx players use
decryption technology, not encryption, and that's where the problems
Hunt: Thanks for answering
some of our questions, Paul.
Brindze: Certainly. My
The editor would like to thank Paul Brindze and Josh Dare of Divx,
for taking the time to speak with The
Digital Bits, and for arranging the interview.
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