DivX Profits Drop10 Mar, 2009 By: Chris Tribbey
Like many other businesses, video tech company DivX saw its profits down in the fourth quarter of 2008, with net income of $2.6 million, compared to $3.7 million during the same period in 2007.
The San Diego-based company reported profits of $10 million for the year, mostly thanks to licensing fees from DVD and Blu-ray Disc players carrying the DivX media format. DivX CEO Kevin Hell doesn’t see that revenue stream changing too much in 2009, despite the drop in consumer spending. Seventy percent of DivX’s revenue in the fourth quarter was from technology licensing.
“Consumer spending has experienced a significant drop off in retail and online sales. There is a definite shift toward less expensive, lower-end DVD players with fewer features,” Hell said during a conference call with investors March 10. “However, the primary focus for our licensing business last year was to expand our global penetration beyond DVD players into a variety of emerging product categories that consumers are using to enjoy digital video.”
That includes a total of 117 Blu-ray players that are DivX certified.
“We estimate that our Blu-ray certified partners now account for approximately half of the market for Blu-ray standalone DVD players and the DivX penetration in Europe to be approximately 26% for the fourth quarter,” Hell said. “Many analysts are now seeing encouraging signs that the Blu-ray market is growing faster than predicted, despite the economic slowdown.
“We are confident that we are well positioned to benefit from this growth as Blu-ray replaces traditional red-laser DVD players.”
In other news, DivX announced it has inked a multiyear deal with Google. Starting in the next month or so, consumers who download DivX software tools will be offered certain Google products, starting with Google Chrome Browser.