You Win Some You Lose Some

Additional ruling
3 good transcripts with background on case to date (1 , 2 , 3 )

It’s been nearly two years since DivX (DIVX) filed their “pre-emptive” lawsuit against Vivendi (VIVEF.PK) subsidiary Universal Music Group and so far, there really hasn’t been much to talk about. DivX’s original lawsuit was thrown out after UMG removed the overhanging legal threat against Stage6 by actually filing a suit alleging copyright infringement.

One of the things that I love about publicly traded companies is the amount of information they have to publish in their regulatory filings. Combing through the gaboolgook of business speak, legal disclaimers and operating results probably doesn’t sound all that exciting, but it can be fun when you find secrets buried in the tediousness of it all.

The key to unlocking most filings, isn’t so much what they tell you, but what’s missing. If you look at the numbers that they do give you from different perspectives, you can often get a rough outline of the ones that aren’t there.

The last couple of years may have felt like a bad dream to most investors, but for DivX (DIVX) shareholders it’s been nothing short of a nightmare. They don’t hand out Oscars for businesses, but if they did, DivX would have won, hands-down, for best horror flick.

Unless you’ve been living under a rock, you know that a housing boom enhanced by risky leverage has caused an implosion within our very financial system. What was first contained to the real estate and financial markets has now quickly spread into mainstream job losses.

While the panic may have subsided, the pain that people continue to feel is very real. Businesses continue to fail and the very health of some of the largest financial institutions still remains in doubt. There have been a lot of solutions proposed for getting ourselves out of this debt ridden mess, but most agree that it’s going to take some kind of investment to break the vicious downward spiral. Some argue that this investment should come from the government through stimulus spending, while others have argued that we need tax breaks and incentives for the market to properly function. Some say we should do nothing and let the market figure it out. There are even those who argue that the tax revenue from legalizing marijuana could be the solution to our problems.

CNET reported Thursday morning that AT&T (T) and Comcast (CMCSA) are planning on adopting a three strikes and you’re out policy for P2P users. The move is yet another desperate attempt by the media industry to try and regain control over content distribution. Because most broadband providers have government protected duopolies, they hope to use the MSOs as a chokepoint in their war on piracy.

If you don’t actively engage in P2P sharing, you probably don’t think you need to worry about this, but I think there are already reasons to be alarmed. Even before the program’s launch, we are seeing reports of innocent customers being targeted by Comcast’s DMCA enforcement division.

Over the last few years, it’s been no secret that Netflix (NFLX) has become the dominant force for DVD by mail rentals. There may be plenty of other ways to watch films, but when it comes to renting through the mail, Netflix’s laser-like focus has put them in the enviable position of being able to assert a large degree of control over the economics of their market. While there is nothing wrong with a company being so successful that they become the dominant player through skill, there are laws against abusing that power to prevent competition.

A few years ago, Wal-Mart (WMT) created a copycat DVD rental service in order to try and get their own piece of the DVD rental market. Their results were disastrous and despite significant financial and retail advantages, the service never caught on with consumers. Eventually, Wal-Mart realized that it was foolish to spend as much time and money focusing on such a small part of their core business, so they threw in the towel and essentially sold their membership base to Netflix. While we know that the agreement included some cross promotional advertising, the actual terms of the deal weren’t ever publicly revealed.

Earlier this week, Ubergizmo broke the news that DivX (DIVX) has officially updated their Connected software to include support for flash video. With 98% of the world’s computers already using flash, this may not seem like a big deal, but when you consider that 0% of the world’s televisions supports flash, this really is groundbreaking.

Along with the update, DivX also released several plugins for their Connected device. These plugins add support for Vimeo, Daily Motion, YouTube and for the first time ever, Hulu all on your TV set. After playing around with the update, I created a video of the software in action. In the clip, I detail the basic features of DivX Connected and give you the very first look at Hulu Connected in action.

I knew it was coming, but I finally received my 9.4 software update. The update includes a couple of UI improvements, but TiVo’s (TIVO) support for YouTube (owned by Google (GOOG)) is what I’ve been drooling over. The way it’s currently set up, you need to hit a lot of buttons to get at your favorite content, but thankfully, TiVo has said that that it is working on a way to sync it with your personal YouTube account.

One of the complaints that I often read about YouTube is that it’s just a bunch a cat videos. While it is true that the feline community has found their special crazy place on the site, I feel that this statement does an injustice to all of the hard working innovative filmmakers who are pushing the boundaries of the web. Don’t get me wrong there is a ton of junk on YouTube, but there are also some really talented people who are redefining the relationship between an artist and their audience.

A few months ago, Raghu Srinivasan launched a website named Feedflix that allows you to use your customized Netflix (NFLX) RSS feeds to track how you are using your membership. The site monitors your usage data and can tell you things like how much you spend per DVD rental or the typical number of days that you hold onto your DVDs before sending them back for new ones.

While having someone automatically calculate this data is helpful to me, when I first used the service, it didn’t really tell me anything new about how I use Netflix. Since I enjoy number crunching, I had already been tracking this info and knew that I was spending about $3 for every DVD I rented.

Good news web video fans. Hot off the presses Doom9’s forums, we learn that the upcoming release of DivX (DIVX) 7 is going to support the Matroska video format! Now I know that many of you are probably asking yourself Matroskwho?, but believe me when I tell you that this is a big deal for both DivX and Matroska fans.

A DivX/Matroska hook up will not only give web video creators even more options over how they want to present their content, but it will also ensure that consumers are able to take advantage of these advanced features with their favorite consumer electronic products. In the past, Matroska fans have had to go through a painful and complicated process in order to get their MKV files to play nice with their DivX hardware devices, but with the 7.0 release, it should be as easy as hitting play on DivX 7.0 gadgets.

Jonathan Weill with Bloomberg news noticed that CBS’ (CBS) market cap is currently lower than its book value. When a stock is trading under its book value, vulture value investors tend to start getting interested, but in CBS’ case this may have all the makings of a value trap.

The problem, most of the assets on CBS’ balance sheet are attributed to goodwill.

DivX (DIVX) reported their 1st quarter earnings on Monday and while I’m still waiting to read the actual 10k before digging too far into the numbers, I did want to comment on what I see as a significant shift in strategy. Over the last 7 years, DivX has done an impressive job of building an eco-system around a single file format.

The first time that I came across a DivX file, I actually thought that it was some kind of a virus. It took me two weeks before I worked up the courage to download the DivX media player so that I could play the movie, but once I did, I realized that my fears were unfounded. The file not only offered a superior video experience, but it was a lot smaller than the MPEG files that I was used to downloading. Since I was on a dial-up connection at the time, every little byte made a big difference.

Over the last year, I’ve been drooling over the new GTA and with less than a week before the launch, I’m starting to really get fired up. I’ve been playing GTA since it was a PC download only and with every new release the game gets better and better. When Rockstar ran their first trailer for the game, I immediately went to their site to reserve a copy. When I saw that overnight shipping was an extra $20 (!) I canceled the order and decided to go the retail route instead.

I don’t buy a ton of games, but when I do it’s almost exclusively from Gamestop (GME). Normally, I care more about price than brand recognition, but over the years certain brands have won my loyalty and Gamestop is one of them. Whenever I visit their stores, the employees are always really friendly and give great advice on which games to buy. Gamestop is one of those rare places where an employee will actually try to talk you out of a sale, if you try to buy a game that blows.

Over the past few daysbuzz has been building over the possible launch of a Stage6 clone. According to the DivxIT.net website, a Stage6 “alternative/clone” will be revealed on April 29th. If this is true, it would be an exciting development for fans who still crave the high quality Stage6 experience.

This isn’t the first time that someone has tried to hype the launch of a Stage6 replacement. As soon as Stage6 announced their shut down, there was a flurry of fake Stage6 clone announcements. Most of those sites fizzled out before they even got started. NewStage6.com was the first “replacement” to pop up on my radar. Initially they had a timer counting down until their launch, but today, the site is all but empty. Highlol.com was another website that tried to create buzz around the Stage6 collapse. They promised free HD DivX downloads, but there still aren’t any videos on the site today.

As someone who lives in the United States, it’s easy to forget that TiVo (TIVO) isn’t available everywhere. Over the last few years, we’ve seen TiVo support expanded to Canada, Mexico, China and pretty soon Australia, but TiVo’s international expansion hasn’t come without its fair share of head fakes.

Early on in their history, TiVo tried to bring the TiVolution to Britain, but the initiative proved too costly and they later withdrew support to focus on North America. For a long time, I thought that TiVo would stick exclusively to the US market, but about three years ago, the Nihon Keizai Shimbun announced that TiVo was trying to form a Japanese partnership and had plans to launch a version of TiVo in Japan, beginning in early 2007.

Over the past week, I’ve spent a lot of time thinking about DivX’s (DIVX) decision to close down Stage6. When I first heard the news, I wasn’t sure how to feel about the decision. On one hand, I believe strongly in the free market system and when DivX chose to go public, they took on an obligation to look after their shareholder interests.

By turning to the public, DivX was able to raise more than $140 million in cash from investors who believed in the future of the company. Having access to this kind of capital opened a lot of doors for DivX, but it also came with strings attached. While it’s easy to blame DivX’s insiders for pulling the plug, without their initial support, DivX never would have been able to create Stage6 to begin with. I disagree with the final decision to shut the site down, but I can at least understand the economic realities that drove the decision to remove Stage6 from the core business.

DivX (DIVX) took a step closer to being forced to walk the plank after suffering their first legal setback in their copyright dispute with Universal Music Group. In a legal filing published late Tuesday night, Judge Dana Sabraw dismissed DivX’s request to declare Stage6 legal, ahead of their UMG piracy trial.

The dispute originally started in December 2006, when UMG notified DivX that several of their videos were showing up on their Stage6 website. In the original cease and desist letter, UMG didn’t provide DivX with a list of the infringing videos, but still demanded that DivX remove all Universal content. A month later, UMG sent a second letter, only this time identifying specific videos that they had problems with. DivX promptly removed the videos in question and didn’t hear from UMG’s legal department for another 8 months.

Even though I’m an HDTV fanatic, it wasn’t until this past weekend that I finally made the jump to an HD monitor. While I don’t have HDTV tuners on my Media Center, I do have an HD camcorder and it was important for me to be able to edit my high resolution videos.

After doing a little bit of research, I decided to pick up a SyncMasterTM 226BW from Samsung. Between the new monitor and my ATI Radeon HD 2600 XT video card, the resolution looks absolutely stunning. Even my home movies look fantastic in HDTV. I really couldn’t have been happier with the upgrade.