Sonic Solutions DivX Purchase Will Expand RoxioNow Distribution, Executive Says
Sonic Solutions’ acquisition of DivX will broaden distribution of the RoxioNow video streaming platform as it leverages DivX’s ties to CE manufacturers, Mark Ely, executive vice president of strategy, told us. With DivX already embedded in digital TVs, Blu-ray players and cellphones, RoxioNow’s video streaming service will become a key component in CE devices as the companies combine technologies, Ely said. Sonic is already providing the RoxioNow platform for the DivX TV service that expected to launch this fall in three LG Electronics’ Blu-ray players via LG’s NetCast service. And with DivX already embedded in select LG, Motorola, Pantech and Samsung cellphones, RoxioNow gets a foothold in mobile technology. RoxioNow-based Blockbuster on Demand is available on an HTC smartphone sold through T-Mobile.
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"Clearly one of the areas we feel we have a lot synergy with DivX is leveraging their expertise on the mobile side because they have tremendous penetration and that’s an area where we're going to see more of a shift to premium content,” Ely said. “That’s going to be part of the consumers’ eco-system for purchasing and playing back premium movies and television shows."
The purchase of DivX also potentially gives Sonic access to the Google TV platform that’s expected to debut this fall in Sony products. DivX has a licensing agreement with Google. Google pays DivX fees based on successful activation of Google products, including its Chrome browser, with DivX software. DivX certifies Google Android-based devices including cellphones, said Matt Milne, executive vice president of sales and marketing at DivX. Sony also is among DivX’s major customers, accounting for 12 percent of its $70.6 million in revenue in the fiscal year ended Dec. 31. While it’s “fairly early” in development of the Google TV platform, “we're continuing to explore ways to work with Google on other initiatives that leverage digital distribution of video technology,” Milne said.
While the DivX TV streaming service would appear to potentially compete with RoxioNow-based services like Blockbuster on Demand and Best Buy’s CinemaNow, DivX and Sonic built their businesses on open platform and that won’t change with a combined company, Milne said. DivX TV will be one of many “tools any of our customers can deploy to help differentiate their product,” Milne said. The platform grew from DivX’s acquisition of AnySource last August. In addition to Sony and LG, other DivX licensees include Iomega, Philips, Samsung and Toshiba.
"When you combine DivX TV with RoxioNow you really have something that has scalability and that’s something our customers have asked for,” Milne said. “They want the ability to scale multiple different retail stores, but do it efficiently so it doesn’t require a unique engineering investment on the CE manufacturers’ part.” DivX TV will be the next generation of DivX’s Connected platform that debuted in standalone adaptors marketed by Hauppauge Digital and D-Link and others. The devices had slow sales.
"We learned that consumers just don’t want a separate device to connect to the cloud in their living room,” Milne said. “They want it to be embedded and a seamless experience. That’s why you see the trend of embedded TVs."
DivX also could expand Sonic’s Qflix manufacturing on demand (MOD) business, Ely said. Sonic’s Qflix provides the platform for Amazon’s CreateSpace MOD service as well as Warner Bros.’ WBShop.com, which has a production agreement with Allied Vaughn. Qflix initially targeted retail for download to burn DVDs, but has since shifted focus to MOD, Ely said. “We could see where a consumer launches DiVx and connects to a RoxioNow service with an extension to a back-end manufacturing supply chain for consumers that want discs,” Ely said. “We'll use the appropriate codecs for the appropriate devices really broadly and in the case of Qflix we'll use standard DVD copy protection.” In the case of putting a movie on a USB stick or streaming “to your television, we will use the DivX DRM,” he said.
Sonic expects to keep DivX’s headquarters in San Diego as well as offices in Germany and Russia, Ely said. Sonic has 350 employees, while Sonic has 550, company officials said.