Everyday someone forwards me a link to another pixilated and grainy video on Google's (NASDAQ:GOOG) YouTube. Most of the content are clips from previously copyrighted material, but the most annoying feature is the quality of the Flash-based video displayed. In this day in age of high-definition video, why must we accept postage stamped size, poor quality video? Because Adobe's (NASDAQ:ADBE) Flash video leads the market in Internet-based video over Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Real, and DivX (DIVX).
This market lead has led Adobe to believe that they can launch yet another media player to compete against all of the other leading players and new ones like Joost and Democracy. The Adobe Media Player is yet another video RSS aggregator that will include DRM and advertising. So how will Adobe differentiate it from all of those other players?
Their only differentiator is the huge amount of web sites already using Flash video. With the Adobe Media Player, web sites using Flash video can advertise through the player providing other outlet to their sites. Adobe will line up all of the usual content providers to seed the player/aggregator with content. But the question remains; do we really need yet another media player?
I have all of the above mentioned players on my machine and I use all of them because not one of them can satisfy all of my needs. iTunes manages my podcasts and some of my music. RealPlayer is my primary music library manager. Democracy Player is my video podcast aggregator. The only time I use Windows Media Player is when I download WMP-formatted content; otherwise, most web content is played from the web site with the embedded QuickTime player. I would really like a single player that can do all of those functions so I would not have to chew up all of my disk space and CPU cycles running all of those separate players.
So that brings me back to the Adobe Media player. How can Adobe differentiate their player from the rest of the fray? From the announcement last week, I see no features or capabilities that would cause me to download and install yet another media player, and I believe that most users out there will feel the same. The Adobe loyalists that use CS3 including Flash to design web sites will be the ones to use it.
Adobe has promised high-definition Flash video in its media player, but why bother when there is DivX? DivX is the clear winner in high quality video over even MPEG-4. I try to view and download content in DivX format whenever possible. DivX produced high-definition Internet video before all of the others started jumping on the bandwagon. This little San Diego company has a great underground following with some mainstream content that they publish through their Stage6 web site. Visit Stage6 and you will see large, high-definition videos that are worthy of display on your computer or your $7000 plasma TV. I often use their CODEC's with the RealPlayer to play and manage video. I create home videos for playing on my computer, web site, or DVD with the DivX codec in Roxio's Easy Media Creator.
The problem with DivX is that it is not as ubiquitous on the web or in DVD as other media formats although many DVD players, TV, recorders, and cameras now support the DivX format. DivX is challenged not by technology, but by a sound marketing strategy. They have made great inroads in the consumer electronics market, but they failed to make significant penetrations in consumer content, web video, mobility, and IP-TV/Internet TV.
What markets are left for DivX? They missed the boat to be the format for high-definition DVD. Microsoft is leading in IP-TV deployments, and Adobe's Flash dominates the Internet. That leaves them relegated to yet another video format to fight out a niche content creation market for those people that want exceptional quality video in a small package. There is a long-shot that they could be utilized as a next generation mobile content format should they seek partnership with their neighbor Qualcomm (NASDAQ:QCOM). As displays on mobile devices grow and have greater resolution, customers are not going to be content with the graininess from the 3GPP format currently in use. DivX certainly has a shot to position themselves as a next generation mobile content format.
Although a mobile strategy has the potential to propel them beyond the $100 million revenue chasm, I do not see the talent within the company to achieve that goal. DivX will continue on their respectable revenue growth trajectory from software sales and licensing revenue and remain under the $100 million mark for the next few years. Consumers will have to settle with poor quality Flash video with islands of DivX clarity and portability.
Disclosure: This article is linked to the DivX site where they offered to send a serial number for a copy of DivX Pro although I already have these capabilities through Roxio Easy Media Creator.
DIVX since IPO: