Sonic Completes DivX Acquisition8 Oct, 2010 By: Erik Gruenwedel
Sonic Solutions Oct. 8 said it has officially completed its $323 million acquisition of digital media company DivX.
First announced in June, the deal should help Novato, Calif.-based Sonic expedite the debut of its RoxioNow movie download technology in third-party consumer electronics devices, including foreign markets where DivX is well-established.
“The acquisition of DivX accelerates our vision to make accessing entertainment over the Internet directly from home and mobile devices as pervasive as physical disc consumption is today,” said David Habiger, president and CEO of the combined company, in a statement. “With DivX, we instantly add hundreds of millions of consumer electronics devices to our footprint; make it faster and more efficient for device manufacturers, retailers, and studios to launch digital services; and increase our global reach, particularly in the European market.”
Indeed, the DivX player and DRM (digital rights management) technology has been included on more than 300 million devices from 150 different CE manufacturers – mostly in international markets where Sonic has had less success, according to Eric Wold, analyst with Merriman Curhan Ford in New York.
He said Sonic remains on track to embed RoxioNow technology in 30 million CE devices by June 2011.
“We believe we could now see RoxioNow included on potentially hundreds of new [devices] during the 2011 and 2012 product years,” Wold wrote in a note.
Ralph Schackart, analyst with William Blair & Co. in Chicago, said the RoxioNow platform could be included in 48 million to 75 million devices by 2012, according to pro-forma estimates.
Although Sonic has had success with both OEMs and major retailers for the adoption of RoxioNow, Wold believes it remains to be seen whether consumer adoption and utilization of the service spikes during the holidays.
“We understand that Best Buy will be heavily promoting CinemaNow (their name for RoxioNow) to CE product customers, while RoxioNow will also be launched with both Sears and Kmart – both of which could yield strong results,” Wold wrote. “While attach rates have been moving higher (consumers signing up to use the service), given that it is non-subscription, we believe hearing evidence of usage levels by Sonic management is more important.”