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Earlier this week, DivX (DIVX) issued a press release announcing a new partnership with MoboVivo. The deal will allow MoboVivo to package and distribute its content along with DivX certified consumer electronic devices.

While the revenue that DivX can earn from these sorts of content partnerships could end up being meaningful, considering that these sorts of relationships currently account for less than 3% of DivX’s total revenues, it’s pretty hard to get too excited over the availability of new nature shows on the DivX platform.

This isn’t to discount what MoboVivo is trying to create or the importance of smaller niche partners to DivX’s business model, but from a business standpoint, it’s hard to get too excited about what smells suspiciously like a Barney agreement. (I love you, you love me, but it’s really just a big purple dinosaur when it comes to earnings).

What the press release did highlight though, was that DivX has a lot of smaller partners that it's adding (and losing) each year. Since most companies tend to focus their press releases on the positives and not the negatives of their business, I wanted to dig a little deeper than the press release, so I went back and found out how many new partners DivX has signed up over the last year and even more importantly, how many partners it lost and didn’t tell us about.

divx

Rather than focusing on its lower margin content deals, I was more interested in tracking the various consumer electronic companies that are licensing its technology. This is a much more meaningful area to DivX’s business and because of the short term nature of these contracts, it’s an area of risk that investors should be constantly evaluating.

In order to identify new and terminated partnerships, I ran a filter that compared DivX’s current list of signed partners with its list from a year ago. While this isn’t as accurate as digging through the SEC filings to get the information, it does offer a quick snapshot into some of the changes that DivX has seen since going public.

Companies No Longer Listed As A DivX Partner

Advance & Beyond-Tech. Co., Ltd.
Advanced Micro Devices (NYSE:AMD)
AKI Digital Electrical Appliance Co., Ltd.
Alarity Corporation
Alpine Corporation
AM Logic
Amoi Electronics Co., Ltd.
Apex Digital Inc.
Arlink Tech Corporation
ChangZhou XINGQIU Electric Co., Ltd.
CIS Technology Inc.
Citron Electronic
CyberHome Europe AG
DigiOn, Inc.
DK Digital AG
Dongguan Visper Industrial Co., Ltd.
Eastern Asia Technology Ltd.
ELSA Japan Inc
Freecom Technologies
Fugle Technology
Gericom AG
Hamg Shing Technology Corporation
Harbour Team Technologies
Hay Media (Ever fortune)
HUMAX Co. Ltd.
Ingenient Technologies
Initial Technology
Kinpo Electronics
Medion AG
MultiChannel Labs
NAD Electronics
NEC Electronics
Neuros Audio, LLC
Newlane Limited
NTP France
Orient Power Multimedia Ltd.
Oxford Semiconductor
Philips Semiconductors
Pixa, Inc.
QiSheng International
Renesas Technology Corp.
RJ Tech
Sandmartin (Zhong Shan) Electronic Co., Ltd.
Scitec
Senlan Ltd/Perspectives
Shantou Hi-tech Zone Idall Enterprise Co., Ltd.
Shenzhen E-boda Technology Co., Ltd.
Shenzhen GIEC Electronics Co., Ltd.
Shenzhen Messo Electron Technology Co.
Shenzhen Mizuda Electronic Co.
Shenzhen MTC
Shenzhen Oriental Digital Technology
Shenzhen Skywood INFO-TECH INDUSTRIES CO., LTD.
Shenzhen Sobon Digital Technology Development Co., Ltd.
Shinco Electronics Australia
Siemssen
Sigma Designs
Sony (NYSE:SNE)
Suns Corporation
Supratech Computers
The Petters Group (Polaroid)
Vieta Audio S.A.
WIS Technologies, Inc.
Yukyung Technologies Co., Ltd.
Zhenjiang Jiangkui Group Co. Ltd.
Zhongshan Kenloon Digital Technology Co., Ltd

New Companies Partnering With DivX

Audio Partnership
Bang & Olufsen Operations a/s
Casio Computer Co., Ltd.
Cisco Systems (NASDAQ:CSCO) - Linksys (Asia) Ptd. Ltd.
CM Tech Co., Ltd.
CommTech Technology Macao Commercial Offshore Ltd.
COMPEX spol. s r.o.
Core Logic
Cowon Systems, Inc.
Diasonic Technology Co., Ltd.
Digen Co., Ltd.
Dongguan Contel Electronics Co., Ltd.
DongGuang Simon Technology Co., Ltd.
Elmarc, B.V.
Espace Services Multimedia (Peekton)
Express Luck Industrial Limited
Express Way Ltd.
Georgia Technology Corp.
Giant Video Electronics Co. Ltd.
Harman International Industries, Incorporated
HB Multimedia Electronic Products Vertriebs-GmbH
Hon Hai Precision Industry Co., Ltd
Hopeful Electric Co. Ltd.
HuiZhou Freeway Electronics Co., Ltd.
Hyo Seong Techno Corp.
Hyundai Digital Technology Co., Ltd.
IDCOM
J&J Information Technology Co., Ltd. (H.K.)
JiangSu HongTu High Technology Co., Ltd.
Kalosnett Co., Ltd.
Kenmark Industrial Co., Ltd.
Konka Group Co., Ltd.
Le Hong Po Company Limited
Link Concept Technology Ltd.
McubeWorks Inc.
Meiloon Industrial Co., Ltd
MtekVision Canada, Ltd.
Musical Electronics Limited
Ngai Lik Digital Technology Limited
OPTIMAG
PEARL Agency Allgemeine Vermittlungsgesellschaft mbH
PlayMedia Systems, Inc.
Polaroid Consumer Electronics LLC
Raza Microelectronics, Inc.
Redmond Group of Companies LP
Renault Samsung Motors
Rotel Co., Ltd.
Samsung Electronics, Inc.
Schoenfeld International, Inc.
Shenzhen Arlink Tech. Co., Ltd
SigmaTel, Inc.
Silisand Co., Ltd.
Sony Corporation Japan
STEL Mutimedia GmbH
SupportPlus China Ltd.
Syabas Technology Inc.
Take Off Multitronics
Telstar Spolka z o.o.
Tinnos, Inc.
Titech
Trak Electonics Polska Sp. z o.o.
UTMS Co., Ltd.
Wissen Media Verlag GmbH
Wistron Corporation
x-peer.de

After taking a closer look at the list, there were a few things that jumped out at me. Which partners are coming and going actually matters a lot more, than how many are turning over. Nonetheless, I found it interesting to see that DivX has actually lost 66 partners, but gained 65 over the last 12 months. Such a high turnover among its client base is caused in part by the very nature of the evolving consumer electronic industry, but this data highlights some of the risks that DivX faces to its core business. While adding 65 new partners is definitely impressive, losing 66 isn’t very characteristic of growth companies.

Another thing that jumped out at me was how many subtle partner changes we saw. Now maybe I shouldn’t have counted these, but I think it matters nonetheless. Case in point, this year it added Samsung Electronics as a partner, but last year it already had a relationship with the parent company Samsung. Without doing more research, it’s hard to determine what impact this nuance has on its business, but when you see companies like Sony drop off the list, only to be replaced by subsidiaries, like Sony Japan, it does make one wonder what the difference means.

When I was putting this list together, I was also surprised at how many of the companies on DivX’s partners list, I had never heard of before. Whether it’s was a small international player in a different market or larger companies that are producing digital products that I did not know about, there were a lot of brands that I wouldn’t normally even consider, without the DivX certification included. If you are Sony, Apple (NASDAQ:AAPL) or Microsoft (NASDAQ:MSFT), then getting access to DivX brand name isn’t as important, but for companies like Hyo Seong Techno Corp, having the DivX certification is a great way to leverage DivX’s brand name and can make or break their products, when it comes to DivX consumers.

Overall, I’m not really sure how useful this list is, but going through the exercise of comparing what’s changed over the last year, has really highlighted how diversified DivX really is. Don’t get me wrong, there are several partners that make up a good chunk of its revenue, but when you have over 300 partners, it helps remove some of that concentration risk from the equation.

While I don’t expect that we’ll start seeing press releases announcing when DivX loses a contract, this is something that I’m planning on paying closer attention to going forward. While I can understand DivX losing a customer because it went out of business or was acquired, it would be fascinating to learn why some partners are going in a different direction. I am still optimistic about DivX’s future, but retaining its current CE customers will be an important challenge that investors should not ignore and something that I’d like to see DivX do a better job at.

DIVX 6-mo chart:
divx 220407 chart

Source: A Year In Rewind - DivX’s Past And Present CE Partners