October 15, 2008

DivX, Warner Bros. Sign Digital Distribution Deal

Tiny DivX (DIVX) is quietly beefing up what it hopes will become a formidable alternative to Apple's (AAPL) iTunes movie download service. San Diego' DivX, maker of software to download movies to consumer devices, on Oct. 14 announced a deal that lets it digitally distribute movies from Warner Bros. (TWX). In DivX's second deal with a major studio, Warner Bros. follows Sony Pictures in providing newly released and library films for download and viewing on a range of game players, set-top boxes, DVD players, and other devices.

The two studios give DivX access to about half the films Hollywood currently produces, says DivX CEO Kevin Hall. Warner Bros. will also make available about 2,000 of its older movies, the same number it now sells to such brick-and-mortar retailers as Blockbuster (BBI), says Jim Wuthrich, Warner's senior vice-president for digital distribution. In time, that number could rise closer to the 7,000 flicks currently in the Warner Bros. library, Wuthrich says. "We see digital distribution as a small but growing part of our business," says Wuthrich, who credits DivX's secure format for protecting Warner films from piracy as one reason the studio signed on.

DivX isn't yet saying how much it will cost customers to download to own or to rent films, but film studios have been eager to expand their ability to offer films through a wide array of outlets. That would give them greater leverage in fending off Apple's efforts to control prices, as it has done with music labels. Warner, for instance, also has a deal with Microsoft's (MSFT) Xbox gaming console, and most studios provide films to CinemaNow, an online distribution retailer.

Under deals with consumer electronics companies, DivX licenses digital video technologies to an estimated 100 million electronics products that have been certified by DivX. Those companies include Sony (SNE), Pioneer, JVC, and others.