End of the road for pay-per-view DVDs

Published June 16, 1999 10:00AM (EDT)

The developers of Divx, a for-rent version of digital video disks that proved unpopular from the start, pulled the plug on the new technology on Wednesday after failing to attract enough retailers and movie studios.

Circuit City and a Los Angeles entertainment-law firm withdrew Divx two years after launching plans to make a DVD that can be viewed once and then thrown away.

Divx was mired in controversy from the start. The Divx encryption technology required specially encoded discs and players; in addition, the new DVDs didn't work on existing DVD players that people already bought, threatening to confuse consumers over what to buy.

Circuit City, a major consumer electronics chain, said movie studios didn't make enough movies to play in the format, and other stores failed to come on board.

"Despite the significant consumer enthusiasm, we cannot create a viable business without support in these essential areas," said Richard Sharp, chief executive of Circuit City Stores and the Divx venture, called Digital Video Express.

Digital Video Express will provide a $100 cash rebate to all consumers who purchased Divx-enhanced players prior to today. Circuit City announced this morning that it will take a $114 million charge to shut down the business.

Digital video discs look like audio CDs, but store information on both sides and are promoted as the replacement to videos on tape. In addition to greater storage capacity, they offer superior movie images and sound, and viewers can skip to any scene.

By Associated Press

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