November 2002

Digital Entertainment Post-Napster: Movies

Continued from page 2

By Thomas Bass

Divxnetworks is perched above  the scrubby arroyos north of San Diego in one of the sprawling industrial haciendas that house the area's technology companies and surviving dot coms. I enter one of these low-slung buildings, which also happens to be where MP3.com got its start, and walk through a kitchen into a windowless cave the size of a basketball court. Large enough to hold most of the company's 34 employees, the room is filled with three rows of computer-laden tables. Along both sides of the tables is a phalanx of high tech Herman Miller Aeron chairs.

Rota is a tall, loose-limbed man who glides through space, peering quizzically at the world through black-framed glasses. His dark hair, pulled into a ponytail, frames his long face, and the hint of a smile tugs at the corners of his mouth. He is witty and irreverent, and he knows how strange it is for a former hacker from the media backwater of southern France to be living in California, snapping at Hollywood's heels.

In a conference room that holds two big television screens, Bridget Jones's Diary runs side by side in two versions. One is a store-bought DVD. The other is a compressed DivX video. At first glance, the two are nearly indistinguishable. When I open the cabinets under the televisions, I learn that the movies are playing not on video recorders but on computers. Industry wisdom says that video-on-demand will not become a mass phenomenon until someone supplies the electronic devices necessary for wiring televisions, personal digital assistants, and other consumer electronics directly to the Internet. And this is where DivXNetworks hopes to make its money. The company wants to see DivX technology built into every consumer product with a screen, allowing DivXNetworks to collect licensing fees and other payments.

This ambition pits the small startup squarely against some of the industry's giants. "I think it's going to be pretty tough," says Andrew Frank, technology officer at Viant, a media consultancy. "They're going head-to-head against Microsoft, and the best technology doesn't necessarily win."

The plan raises another question. Has Rota gone over to the "other side"?

"DivX wasn't designed as a tool for pirates," Rota says. "We saw what Napster was doing to the music world and didn't want to make the same mistake. I support free speech, but I don't support the pirate's idea of free speech,' which is nothing more than an ideological cover for stealing other people's stuff. You can't please only the copyright holders or only the end users who want everything for free," he says. "There has to be a third way, some middle ground allowing people to get movies on their personal computers."