Editing DIVX (section)

==History==
===Development and launch===
DIVX was introduced on September 8, 1997 (after previously being made under the code name '''Zoom TV'''),<ref>{{cite web|url=http://www.e-town.com/news/articles/divx090997dea.html |title=Say Hello to DIVX|first=David J.|last=Elrich|date=September 9, 1997|website=E/Town News|archive-url=https://web.archive.org/web/19990117080757/http://www.e-town.com/news/articles/divx090997dea.html|archive-date=January 17, 1999|url-status=dead|access-date=September 18, 2019}}</ref> with the format under development since 1995.<ref name="KinderGentler">{{cite web|url=http://e-town.com/news/articles/divx100198rga.html |title=A Kinder, Gentler DIVX|first=Ron|last=Goldberg|date=October 1, 1998|website=E/Town News|archive-url=https://web.archive.org/web/19990421174046/http://e-town.com/news/articles/divx100198rga.html|archive-date=April 21, 1999|url-status=dead|access-date=September 18, 2019}}</ref> The format was a partnership between [[Circuit City]] and entertainment law firm Ziffren, Brittenham, Branca & Fischer, with the former company investing $100 million into the latter firm.<ref>{{cite web|url=http://circuitcity.pic.net/help/pr90897div.html |title=CIRCUIT CITY STORES, INC. ANNOUNCES DIVX PARTNERSHIP |date=September 8, 1997 |website=Circuit City Online|archive-url=https://web.archive.org/web/19980129142552/http://circuitcity.pic.net/help/pr90897div.html|archive-date=January 29, 1998|url-status=dead |access-date=September 18, 2019}}</ref> One advertiser attempted to sign with the company, but was unable to do so, which spurred a lawsuit between the two.<ref>{{cite web |url=http://adage.com/news_and_features/features/19971027/article5.html|title=Divx nixes adviser's naming of ad agency|first=Laura|last=Petrecca|website=Advertising Age|archive-url=https://web.archive.org/web/19981205160100/http://adage.com/news_and_features/features/19971027/article5.html|archive-date=December 5, 1998|url-status=dead|access-date=September 18, 2019}}</ref>

The product made a quiet showing at the [[Consumer Electronics Show]] in [[Las Vegas]] in early January 1998,<ref>{{cite web|url=http://www.techweb.com/wire/story/TWB19980112S0013 |title=DVD Takes Spotlight As Divx Hides|first=Andy|last=Patrizio|date=January 12, 1998|website=TechWeb|archive-url=https://web.archive.org/web/19990221114117/http://www.techweb.com/wire/story/TWB19980112S0013|archive-date=February 21, 1999|url-status=dead |access-date=September 18, 2019}}</ref><ref name=EGM104>{{cite magazine |title=A Tale of Convergence|magazine=[[Electronic Gaming Monthly]] |publisher=Ziff Davis |issue=104 |date=March 1998 |page=32}}</ref> but won the attention of [[20th Century Fox]] which on February 20, 1998 signed a deal to release their titles on the format.<ref>{{cite web|url=http://www.hollywood.com/news/topstories/02-19-98/html/2-4.html|title=Fox Home Video Enters Controversial Divx Deal|first=Jim|last=Bartoo|date=February 20, 1998|website=Los Angeles Times|archive-url=https://web.archive.org/web/20000917054113/http://www.hollywood.com/news/topstories/02-19-98/html/2-4.html|archive-date=September 17, 2000|url-status=dead|access-date=September 18, 2019}}</ref> After multiple delays,<ref>{{cite web|url=http://www.techweb.com/se/directlink.cgi?CRW19980601S0012|title=Rival Retailers Shore Up Defenses As Divx Player Is Once Again Delayed|first=Doug|last=Olenick|date=June 1, 1998|website=TechWeb|archive-url=https://web.archive.org/web/20001006211425/http://www.techweb.com/se/directlink.cgi?CRW19980601S0012|archive-date=October 6, 2000|url-status=dead|access-date=September 18, 2019}}</ref> the initial trial of the DIVX format was run in the [[San Francisco]], California and [[Richmond, Virginia]] areas starting on June 8, 1998.<ref name=DVDDM/><ref>{{cite web|url=http://news.cnet.com/news/0-1003-200-330046.html |title=Divx debut in limited rollout|first=Stephanie|last=Miles|date=June 8, 1998|website=CNET News|archive-url=https://web.archive.org/web/20000915105519/http://news.cnet.com/news/0-1003-200-330046.html|archive-date=September 15, 2000|url-status=dead|access-date=September 18, 2019}}</ref> Initially, only a single Zenith player was available starting at $499, along with 20 to 50 titles. Very few players sold during this time period, with The Good Guys chain alleging that fewer than 10 players were sold during this time period.<ref>{{cite web|url=http://www.thedigitalbits.com/articles/divxgoodguys.html|title=Divx at the Good Guys|date=September 15, 1998|website=The Digital Bits|archive-url=https://web.archive.org/web/20000815194656/http://www.thedigitalbits.com/articles/divxgoodguys.html|archive-date=August 15, 2000|url-status=dead|access-date=September 18, 2019}}</ref> A nationwide rollout began three months later, on September 21, again with only one Zenith player and 150 titles available in 190 stores in the western U.S.<ref>{{cite web|url=http://www.twice.com/domains/cahners/twice/archives/webpage_3091.htm|title=Divx Rolling Out; Western States Lead In Launch |date=September 7, 1998|website=TWICE|archive-url=https://web.archive.org/web/19981202195144/http://www.twice.com/domains/cahners/twice/archives/webpage_3091.htm|archive-date=December 2, 1998|url-status=dead|access-date=September 18, 2019}}</ref>

At the format's launch, DIVX was sold primarily through the Circuit City, [[Good Guys (American electronics chain)|Good Guys]], and [[Ultimate Electronics]] retailers. The format was promoted to consumers as an alternative to traditional video rental schemes with the promise of "No returns, no late fees." Though consumers could just discard a DIVX disc after the initial viewing period, several DIVX retailers maintained DIVX recycling bins on their premises. On September 22, 1998, a fourth retailer, Canadian [[Future Shop]], signed a contract with DIVX to stock the format, although only in 23 stores in the U.S. only.<ref>{{cite web|url=http://www.news.com/News/Item/0,4,26682,00.html|title=Canadian firm extends Divx reach|first=Stephanie|last=Miles|date=September 22, 1998|website=CNET News|archive-url=https://web.archive.org/web/19990222153451/http://www.news.com/News/Item/0,4,26682,00.html|archive-date=February 22, 1999|url-status=dead|access-date=September 18, 2019}}</ref> Thomson's player, after multiple delays, arrived on October 3, 1998,<ref>{{cite web|url=http://news.cnet.com/news/0-1006-200-336297.html|title=Thomson unveils Divx player |first=Stephanie|last=Miles|date=October 2, 1998|website=CNET News|archive-url=https://web.archive.org/web/20001021134623/http://news.cnet.com/news/0-1003-200-333809.html|archive-date=October 21, 2000|url-status=dead|access-date=September 18, 2019}}</ref> followed by Panasonic's on December 10.<ref>{{cite web |url=http://news.cnet.com/news/0-1003-200-333809.html|title=Curtain rising on new Divx player |first=Stephanie|last=Miles|date=December 10, 1998|website=CNET News|archive-url=https://web.archive.org/web/20001026170055/http://news.cnet.com/news/0-1006-200-336297.html|archive-date=October 26, 2000|url-status=dead|access-date=September 18, 2019}}</ref> The format made its overall national debut on October 12, 1998.{{citation needed|date=September 2019}} A marketing push began that November for the 1998 holiday season, with more than $1 million going into the campaign.<ref>{{cite web|url=http://www.techweb.com/wire/story/TWB19981106S0023|title=DVD, Divx Promotions Kick In For Christmas|first=Andy|last=Patrizio|date=November 6, 1998|website=TechWire|archive-url=https://web.archive.org/web/20001101094745/http://www.techweb.com/wire/story/TWB19981106S0023|archive-date=November 1, 2000|url-status=dead|access-date=September 18, 2019}}</ref><ref>{{cite web|url=http://www.newtekniques.com/TekTicker/Archives/tektick030.html|title=Divx Battle Intensifies!|date=January 4, 1999|website=New Tekniques |archive-url=https://web.archive.org/web/20010210210829/http://www.newtekniques.com/TekTicker/Archives/tektick030.html|archive-date=February 10, 2001|url-status=dead|access-date=September 18, 2019}}</ref> The fortunes of the format would seemingly turn for the better in mid-December 1998, when a shortage of DVD players occurred.<ref>{{cite web |url=http://community.etown.com/news/articles/dvdshortage121798dea.html|title=Are DVD Players Dwindling?|first=David J.|last=Elrich|date=December 17, 1998|website=E/Town News|access-date=September 18, 2019}}{{dead link|date=July 2020|bot=medic}}{{cbignore|bot=medic}}</ref>  In total, 87,000 players were sold during the final quarter of 1998, with 535,000 discs across 300 titles being sold, although fewer than 17,000 accounts for DIVX were created.<ref>{{cite web|url=http://www.unik.no/~robert/hifi/dvd/news05.html|title=Less than 17,000 Divx accounts registered|first=Robert|last=Aas|date=January 4, 1999|website=DVD News|archive-url=https://web.archive.org/web/20000229073048/http://www.unik.no/~robert/hifi/dvd/news05.html|archive-date=February 29, 2000|url-status=dead|access-date=September 18, 2019}}</ref>

===Opposition===
Almost immediately after the format's reveal, a movement on the Internet was initiated against DIVX, particularly in home theater forums by existing owners of the then-still nascent DVD format.<ref>{{cite web|url=http://www.news.com/News/Item/0,4,14125,00.html |title=DVD owners dis Divx|first=Jim|last=Davis|date=September 10, 1997|website=CNET News |archive-url=https://web.archive.org/web/19990116224259/http://www.news.com/News/Item/0,4,14125,00.html|archive-date=January 16, 1999|url-status=dead|access-date=September 18, 2019}}</ref> Broader groups of consumers had environmental concerns with the format, since under the advertised "no returns" model a disc would be discarded as waste once the initial user was done with it, rather than being reused as they were under the traditional rental model.<ref name=EGM104/> Both companies that created the DVD format ([[Sony]] and [[Toshiba]]) also denounced DIVX, as did major studio distributor [[Warner Home Video]] (who was the first major American studio to distribute DVD)<ref>{{cite web|url=http://www.e-town.com/news/articles/divxtoshiba091097dea.html|title=DIVX No, Say Sony and Toshiba |first=David J.|last=Elrich|date=September 10, 1997|website=E/Town News|archive-url=https://web.archive.org/web/19990117090503/http://www.e-town.com/news/articles/divxtoshiba091097dea.html|archive-date=January 17, 1999|url-status=dead|access-date=September 18, 2019}}</ref> and the [[DVD Forum]] (a consortium of developers on the format who standardized DVDs).<ref>{{cite web|url=http://www.nb-pacifica.com/headline/dvdforumsaysdivxwill_1084.shtml |title=DVD Forum Says DIVX Will Confuse Consumers |first=Martyn|last=Williams|date=September 19, 1997 |website=Newsbytes Pacifica|archive-url=https://web.archive.org/web/19980130171517/http://www.nb-pacifica.com/headline/dvdforumsaysdivxwill_1084.shtml|archive-date=January 30, 1998 |url-status=dead|access-date=September 18, 2019}}</ref> Titles in the DIVX catalog were released primarily in [[pan and scan]] format with limited special features, usually only a trailer (although a few widescreen titles did arrive on the format in early December 1998<ref>{{cite web |url=http://www.twice.com/domains/cahners/twice/archives/webpage_3401.htm |title=Divx Prepares To Ship First Widescreen Titles|first=Greg|last=Tarr|date=November 19, 1998 |website=TWICE|archive-url=https://web.archive.org/web/19990224041132/http://www.twice.com/domains/cahners/twice/archives/webpage_3401.htm|archive-date=February 24, 1999|url-status=dead|access-date=September 18, 2019}}</ref>). This caused many home theater enthusiasts to become concerned that the success of DIVX would significantly diminish the release of films on the DVD format in the films' original [[Aspect ratio (image)|aspect ratios]] and with supplementary material. Some early demos were also noted to have unique instances of [[compression artifact|artifacting]] on the discs that were not present on standard DVDs.<ref name=FirstLookAtDivxPlayer/> Many people in various technology and entertainment communities were afraid that there would be DIVX exclusive releases, and that the then-fledgling DVD format would suffer as a result. [[DreamWorks Pictures|DreamWorks]], [[20th Century Fox]], and [[Paramount Pictures]], for instance, initially released their films exclusively on the DIVX format (something that DIVX did not originally intend to happen).<ref name=KinderGentler/><ref>[https://web.archive.org/web/20071007094046/http://www.digitalbits.com/articles/oldstudionews/paramount.html] The Digital Bits: Paramount jumps on DVD wagon; Fox, DreamWorks still out</ref> DIVX featured stronger encryption technology than DVD ([[Triple DES]] instead of [[Content Scramble System|CSS]]) which many studios stated was a contributing factor in the decision to support DIVX.<ref>[http://www.digitalbits.com/articles/oldstudionews/paramount.html Studio & DVD News - Paramount] {{webarchive|url=https://web.archive.org/web/20071007094046/http://www.digitalbits.com/articles/oldstudionews/paramount.html |date=October 7, 2007}}</ref> Others cited the higher price of DIVX-compatible DVD players and rental costs as their reason for opposing the format,<ref>{{cite web|url=http://www.techweb.com/se/directlink.cgi?CRW19971013S0019|title=Supporting new technology @ retail -- Should everyone pay the price for Divx?|first=Warren|last=Mann|date=October 13, 1997|website=TechWeb |archive-url=https://web.archive.org/web/20000305082622/http://www.techweb.com/se/directlink.cgi?CRW19971013S0019|archive-date=March 5, 2000|url-status=dead|access-date=September 18, 2019}}</ref> with one declaring DIVX as "holding my VCR hostage".<ref>{{cite web|url=https://www.nytimes.com/library/tech/99/01/circuits/articles/28pete.html |title=Life After the VCR: Choosing DVD or Divx|first=Peter H.|last=Lewis|date=January 28, 1999|website=The New York Times|archive-url=https://web.archive.org/web/20020226014736/http://www.nytimes.com/library/tech/99/01/circuits/articles/28pete.html|archive-date=February 26, 2002|url-status=dead|access-date=September 18, 2019}}</ref> One online poll surveyed 786 people on the format, of which nearly 97% disapproved of the format's concept,<ref>{{cite web|url=http://www.e-town.com/news/articles/polldivx092597swb.html|title=Poll: DIVX Horribilis|date=September 25, 1997|website=E/Town News|archive-url=https://web.archive.org/web/19990117010303/http://www.e-town.com/news/articles/polldivx092597swb.html|archive-date=January 17, 1999|url-status=dead|access-date=September 18, 2019}}</ref> and another poll in December 1998 reflected 86% disapproval even if the format were free – a testament to the fierce online backlash the format received.<ref>{{cite web |url=http://www.guidetohometheater.com/showvote.cgi?61|title=Poll: If Divx were a free option, would you prefer a player with it built-in?|date=December 13, 1998 |website=Stereophile Guide to Home Theater|archive-url=https://web.archive.org/web/20020131031739/http://www.guidetohometheater.com/showvote.cgi?61|archive-date=January 31, 2002|url-status=dead|access-date=September 18, 2019}}</ref> As early as December 1997, news outlets were already calling the format a failure for Circuit City.<ref>{{cite web|url=http://techweb.cmp.com/crw/news/divx1219.html|title=Divx expensive loser for Circuit City in 1998|date=December 19, 1997|website=TechWeb|access-date=September 18, 2019}} {{Dead link|date=September 2019|fix-attempted=yes}}</ref><!-- Need an active version of this article! -->

In addition to the hostile Internet response, competitors such as [[Hollywood Video]] ran advertisements touting the benefits of "Open DVD" over DIVX, with one ad in the [[Los Angeles Times]] depicting a hand holding a telephone line with the caption: "Don't let anyone feed you the line." The terminology "Open DVD" had been used by DVD supporters and later Sony themselves;<ref>{{cite web|url=http://e-town.com/news/articles/sony022698dea.html|title=Sony Disses DIVX|first=David J.|last=Elrich|date=February 26, 1998|website=E/Town News|archive-url=https://web.archive.org/web/19990423213637/http://e-town.com/news/articles/sony022698dea.html|archive-date=April 23, 1999|url-status=dead|access-date=September 18, 2019}}</ref> in response to DIVX's labeling of DVD as "Basic DVD" and DIVX/DVD players as "DIVX-enhanced". Other retailers, such as [[Best Buy]], also had their concerns, most of them citing possible customer confusion and cumbersomeness with the two formats.<ref>{{cite web|url=http://www.e-town.com/news/articles/divxretail091597xxt.html|title=Retailers Wary of DIVX|first=David J.|last=Elrich|date=September 15, 1997|website=E/Town News|archive-url=https://web.archive.org/web/19990117001138/http://www.e-town.com/news/articles/divxretail091597xxt.html|archive-date=January 17, 1999|url-status=dead|access-date=September 18, 2019}}</ref> [[Pay-per-view]] companies were also concerned with the format intruding on their business sector, namely with their objective of single-use rentals of a film being offered to the consumer.<ref>{{cite web|url=http://www.mediacentral.com/Magazines/CableWorld/News97/1997091502.htm|title=Home Video, PPV: Nix on Divx Format|first1=Kim|last1=Mitchell |first2=Jim|last2=Barthold|date=September 15, 1997|website=Media Central|archive-url=https://web.archive.org/web/19981205032703/http://www.mediacentral.com/Magazines/CableWorld/News97/1997091502.htm|archive-date=December 5, 1998|url-status=dead|access-date=September 18, 2019}}</ref>

However, early concerns of alleged or feared constant usage of the phone line proved to be somewhat exaggerated, as all players needed to do was verify its usage twice a month.<ref name=KinderGentler/> Despite this, informational-freedom advocates were concerned that the players' "dial-home" ability could be used to spy on people's watching habits,<ref name=sfgate/> as well as copyright and privacy concerns about its licensing of the media, with some alleging it violated [[fair use policy|fair-use]] laws entirely.<ref>{{cite magazine|url=http://www.wired.com/news/news/technology/story/6947.html|title=Divx Protects Content, But Not Your Liberties|first=Michael|last=Stutz|date=September 17, 1997|magazine=Wired|archive-url=https://web.archive.org/web/19981205194250/http://www.wired.com/news/news/technology/story/6947.html|archive-date=December 5, 1998|url-status=dead|access-date=September 18, 2019}}</ref>

Allegations of anti-competitive [[vaporware]], as well as concerns within the software industry prompted David Dranove of [[Northwestern University]] and Neil Gandal of [[Tel Aviv University]] and [[University of California, Berkeley]], to conduct an empirical study designed to measure the effect of the DIVX announcement on the [[DVD]] market. This study suggests that the DIVX announcement slowed the adoption of DVD technology. According to Dranove and Gandal, the study suggests that the "general antitrust concern about vaporware seems justified".<ref>{{cite journal| url=http://repositories.cdlib.org/iber/cpc/CPC01-016/| title=The DVD vs. DIVX Standard War: Empirical Evidence of Vaporware| first=David| last=Dranove| author2=Neil Gandal| date=November 1, 2000| journal=Competition Policy Center| id=Paper CPC01-016| access-date=April 16, 2010| archive-url=https://web.archive.org/web/20091016165843/http://repositories.cdlib.org/iber/cpc/CPC01-016/| archive-date=October 16, 2009| url-status=live}}</ref>

===Demise===
Right after the launch of the format, Circuit City announced that despite a gain of 4.1% in net profit, huge expenses of launching that format (among other issues) massively undercut that profit.<ref>{{cite web|url=http://www.twice.com/domains/cahners/twice/archives/webpage_2692.htm|title=Divx Expenses, CarMax Loss Cut Net At Circuit City|date=June 29, 1998|website=TWICE|archive-url=https://web.archive.org/web/19990129072302/http://www.twice.com/domains/cahners/twice/archives/webpage_2692.htm|archive-date=January 29, 1999|url-status=dead|access-date=September 18, 2019}}</ref> As early as September 1998, Circuit City was looking for partners to share their losses from the format's launch.<ref>{{cite web|url=http://www.twice.com/domains/cahners/twice/archives/webpage_3008.htm |title=Divx Trims Circuit City's Qtr., Half Net|date=September 7, 1998|website=TWICE|archive-url=https://web.archive.org/web/19981206073330/http://www.twice.com/domains/cahners/twice/archives/webpage_3008.htm|archive-date=December 6, 1998|url-status=dead|access-date=September 18, 2019}}</ref> Retailers such as [[Blockbuster (retailer)|Blockbuster Video]] did not carry the format at all.<ref>{{cite web|url=http://www.hollywood.com/news/topstories/09-17-98/html/2-5.html|title=Doubts Arise as Divx Readies for National Debut |first=Marla |last=Matzer|date=September 17, 1998|website=Los Angeles Times|archive-url=https://web.archive.org/web/20000609034303/http://www.hollywood.com/news/topstories/09-17-98/html/2-5.html|archive-date=June 9, 2000|url-status=dead|access-date=September 18, 2019}}</ref> 

The format's credibility suffered another blow when suspicions were raised about the nature of apparently independent pro-DIVX websites. Circuit City denied any involvement in creating these sites, one of which closed shortly after tech journalists tried to contact its webmaster.<ref>{{cite web|url=http://www.techweb.com/wire/story/TWB19981220S0001|title=Divx 'Fan Sites' Raise Suspicion|first=Andy|last=Patrizio |date=December 20, 1998|website=TechWire|archive-url=https://web.archive.org/web/20001015061432/http://www.techweb.com/wire/story/TWB19981220S0001|archive-date=October 15, 2000|url-status=dead|access-date=September 18, 2019}}</ref>

DIVX and Thomson Consumer Electronics teamed up in January 1999 to create another format made for high-definition video using existing DVD technology, predating the development of both [[Blu-ray]] and [[HD DVD]] by many years.<ref>{{cite web|url=http://www.eet.com/story/OEG19990107S0022 |title=Thomson and Divx team up on high-definition DVD|first=Junko|last=Yoshida|date=January 7, 1999|website=EE Times|archive-url=https://web.archive.org/web/19990427063018/http://www.eet.com/story/OEG19990107S0022|archive-date=April 27, 1999|url-status=dead|access-date=September 18, 2019}}</ref> The market share for DIVX players was 23% in January 1999,<ref>{{cite web|url=http://www.techweb.com/wire/story/TWB19990326S0014|title=Divx Players Are On The Rise|first=Aaron|last=Ricadela|date=March 26, 1999|website=TechWeb |archive-url=https://web.archive.org/web/19991009135359/http://www.techweb.com/wire/story/TWB19990326S0014|archive-date=October 9, 1999|url-status=dead|access-date=September 18, 2019}}</ref> and by that March, around 419 titles were available in the DIVX format. However, sales for the format quickly fell off after the 1998 holiday season, with all three third-party retailers pulling out of DIVX sales by that point.<ref>{{cite web |url=http://www.unik.no/~robert/hifi/dvd/news06.html|title=Divx is losing momentum, Circuit City to cut spendings|first=Robert|last=Aas|date=March 12, 1999|website=DVD News |archive-url=https://web.archive.org/web/19990507234514/http://www.unik.no/~robert/hifi/dvd/news06.html|archive-date=May 7, 1999|url-status=dead|access-date=September 18, 2019}}</ref> In May, studio support for DIVX would start to be phased out with Paramount refusing to convert their titles to "Silver" discs (and then later stopping DIVX releases entirely), and Disney increasing their DVD activity.<ref>{{cite web|url=http://www.unik.no/~robert/hifi/dvd/news08.html|title=Divx activity reduced|first=Robert|last=Aas|date=May 2, 1999|website=DVD News|archive-url=https://web.archive.org/web/19991114011256/http://www.unik.no/~robert/hifi/dvd/news08.html|archive-date=November 14, 1999|url-status=dead|access-date=September 18, 2019}}</ref> By the format's first anniversary, the future of the format was very grim - with only five DIVX-compatible players (and no DIVX-compatible computer drives), 478 titles, and only Circuit City selling DIVX discs.<ref>{{cite web|url=http://www.unik.no/~robert/hifi/dvd/news09.html|title=Divx anniversary on life support|first=Robert|last=Aas|date=June 8, 1999|website=DVD News|archive-url=https://web.archive.org/web/20000917054206/http://www.unik.no/~robert/hifi/dvd/news09.html|archive-date=September 17, 2000|url-status=dead |access-date=September 18, 2019}}</ref>

The format was discontinued on June 16, 1999,<ref name=DiscontinuationDate1/><ref>{{cite web |url=http://www.techweb.com/wire/story/TWB19990616S0011|title=Divx Is Dead|date=June 16, 1999|website=TechWeb|archive-url=https://web.archive.org/web/20000917054448/http://www.techweb.com/wire/story/TWB19990616S0011|archive-date=September 17, 2000|url-status=dead|access-date=September 18, 2019}}</ref><ref>{{cite web|title=Divx Turns to Dust |url=https://www.eonline.com/news/38320/divx-turns-to-digital-dust|last=Frankel|first=Daniel |date=June 16, 1999|website=E! Online|access-date=September 18, 2019}}</ref> because of the costs of introducing the format, as well as its very limited acceptance by the general public and retailers. At the end of the format's life, Circuit City announced a $114 million after-tax loss,<ref name="DanTynan2006"/> and [[Variety (magazine)|Variety]] estimated the total loss on the scheme was around $337 million.<ref name="DVDDM"/> Over the next two years, the DIVX system was phased out. Customers could still view all their DIVX discs and were given a $100 refund for every player that was purchased before June 16, 1999. All discs that were unsold at the end of the summer of 1999 were destroyed. The program officially cut off access to accounts on July 7, 2001. The player's Security Module, which had an internal Real-Time Clock, ceased to allow DIVX functions after 30 days without a connection to the central system. Unsold players were liquidated in online auctions, but not before being modified to remove the DIVX Security Module. As a result, certain player models demonstrated lockups when DIVX menus were accessed.

On the company website to announce discontinuation of the product on June 16, 1999, it stated: "All DIVX-featured DVD players are fully functional DVD players and will continue to operate as such. All DIVX discs, including those previously purchased by consumers and those remaining in retailer inventories, can be viewed on registered players anytime between now and June 30, 2001. Subsequent viewings also will be available during that period. Discs can no longer be upgraded to unlimited viewing, known as DIVX Silver. Customers who have converted discs to DIVX Silver can continue viewing the discs until June 30, 2001, or can receive a full refund of the conversion price at their request".<ref name=DiscontinuationDate1/> This meant no DIVX discs could play any content after June 30, 2001, rendering the medium worthless.

DIVX appeared as a "dishonorable mention" alongside ''[[PC World]]''<nowiki>'</nowiki>s list of "25 Worst Tech Products of All Time" in 2006.<ref name=DanTynan2006>{{cite web|url=http://www.pcworld.com/article/125772/worst_products_ever.html|title=The 25 Worst Tech Products of All Time|first=Dan|last=Tynan |date=May 26, 2006|website=PC World|archive-url=https://web.archive.org/web/20140730090626/http://www.pcworld.com/article/125772/worst_products_ever.html|archive-date=July 30, 2014|url-status=live|access-date=July 30, 2014}}</ref>