Analyst: DivX Support Coming to Xbox 360
DivX followed up Tuesday night's earnings report with a presentation at the JP Morgan SmMid cap conference. JP Morgan analyst Paul Coster coyly probed Kevin Hell about whether or not we were about to see DivX support on the Xbox 360.
Context & Ripple Effects
DivX has spent 2007 widening its footprint beyond the PC: a June GejBox media streamer put the format into dedicated living-room hardware, and a SanDisk licensing agreement carried it onto portable devices days later. On consoles, though, DivX playback has only existed through workarounds like the MCE video-encoder route for Xbox 360 streaming.
The new wrinkle comes straight from the sell side: fresh off its confirmed Tuesday-night earnings report and a presentation at JP Morgan's Small Mid Cap conference, CEO Kevin Hell fielded a pointed question from analyst Paul Coster about DivX arriving on the Xbox 360 — and gave no confirmation. The relationship is flagged as rumored, so this is analyst expectation-setting around an unconfirmed deal, not an announcement.
First-order effects
- If the support Coster probed about materializes, Xbox 360 owners gain native DivX playback and the MCE transcoding workaround becomes unnecessary for the console's large installed base.
- DivX, having just reported quarterly results, gets an unconfirmed but high-visibility signal that its licensing model may extend to the console market it has so far reached only through third-party encoders and accessories.
Second-order effects
- Sony faces matching pressure on the PlayStation 3: if Microsoft adds DivX natively, codec breadth becomes a differentiator in the console media-box contest rather than a niche enthusiast feature.
- Device partners already in DivX's camp — SanDisk among them — benefit as the format's installed base expands from streamers and portables toward consoles, strengthening DivX's hand in future licensing negotiations.
Third-order effects
- A confirmed deal would advance the thesis floated back in November 2005 that the Xbox 360 could serve as a distribution model: consoles consolidating living-room media playback, with codec licensing becoming one of the levers platform holders pull.
- It would also fit the console-as-media-hub pattern Microsoft was already building in 2007 with the September HD DVD drive add-on, pointing toward a market where format support, not just games, drives console purchasing decisions.
The trend: Consoles are absorbing standalone media-streamer functions through codec licensing deals, turning DivX-class formats from PC-workaround territory into a competitive feature of the living-room platform war.