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DivX Bets Big on H.264, Buys MainConcept

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DivX, a video codec and software company based in San Diego, Calif., announced yesterday that it was acquiring Aachen, Germany-based MainConcept for $22 million with another $6 million in earn outs. For DivX CEO Kevin Hell the acquisition is a bet on the future of video: the H.264 video compression technology. What’s H.264? Take it from Wikipedia, which describes it as “a standard for video compression. It is also known as MPEG-4 Part 10, or AVC (for Advanced Video Coding).”

Unlike DivX’s own technology, H.264 is an open standard, though companies have their own implementations. MainConcept is one of the important players in the H.264 codec business and counts Adobe, Corel, MobiTV, Sonic, Sony, and Panasonic as its customers. This is why it is particularly significant (albeit small in terms of dollars) deal. DivX (DIVX) makes a living by licensing its codec, now used in 40 percent of DVD players sold around the world, thanks to its “ability to compress lengthy video segments into small sizes while maintaining relatively high visual quality.”

With the deal, DivX is acknowledging that the open standard H.264 is becoming a codec of choice when it comes to high quality video — be it broadcast video, streaming Internet video, video on mobile phones, or on consumer devices like next-generation DVD players.

A new breed of digital video playback devices including IP set-top boxes are all being built to play back H.264 video, which is popular because of its versatility. Video content creators can create once and publish to many platforms without worrying too much about compatibility. Or at least that’s the utopian vision.

“H.264 is where digital video is heading,” Hell said in an interview. “Including MainConcept’s technology in our offerings accelerates our time to market.” The new technology from MainConcept will help DivX move beyond just DVD players into new arenas such as cellphones, gaming consoles, camcorders and other digital media devices, Hell said.

DivX plans to integrate MainConcept’s technology into its offerings and ship them to is customers in the semiconductor market by 2008, Hell said. While he thinks the deal is of financial and strategic importance for the company, Hell declined to discuss the details of its implications.

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15 Responses to “DivX Bets Big on H.264, Buys MainConcept”

  1. DivX 7 will probably be it, using this h264 technology.

    Actually as far as I heard, h264 is mostly better then Mpeg4 when you are dealing with low bitrate low resolution stuff. So especially for video content for mobile phones, Apple products, dvb-h, dvb-sh, then it makes more sence to use h264, quality savings are like 40% on sub 500kbit/s stuff.

    As for DVD resolution stuff and HD resolution stuff, quality doesn’t get much improved with h264 as far as I’ve heard. For DVD resolution and HD resolution high bitrate stuff, h264 is only something like 10% better then DivX 6 Mpeg4 simple profile AVI. Quality improvements for such high bitrate high resolution content isn’t worth the much increased hardware requirements to play it back.

    So I think DivX 6 will continue to be a good choice for DVD and HD quality stuff to be distributed over the Internet. Which DivX 7 h264 will be better for stuff targetted to low bitrate and low resolution, as well as for stuff for broadcast distribution such as DVB, HDDVD/Blueray and such which have chosen to use H264 since even though quality improvement might only be 10%, since it’s a new standard and people buy new hardware anyways, then the industry chose to just as well choose the best quality possible.

  2. Its interesting that Divx is being considered as an alternative to standards such as H.264.

    Historically, Divx started with a hacked version of MS’s Windows Media V7 codec and switched to MPEG-4 when they went legit. Since then, they have focussed on developing efficient encoders for MPEG-4 Part 2 (MPEG-4 Advanced Simple Profile/Main Profile).

    While MPEG-4 Part 2 gives 30 – 50% coding effciency improvement on top of MPEG-2, H.264 aka MPEG-4 Part 10 ofers coding effciency improvement upto 100% on top of MPEG-2 (i.e. 1/2 the bit rate of MPEG-2 for comparable quality).

    Since DivX is essentially implementing standards based codecs for the past 5 years or so, we do need to acknowledge the standards community for enabling codec compnies such as DivX to provide high quality implementation of the standards. It’s not quite a case of H.264 being blessed by DivX… rather the other way around :)

  3. Apple has really pushed H.264 to the forefront. If I recall correctly iTunes video content is in H.264. Also, since Apple did a deal with Google, Google’s YouTube is moving, or has moved, its content to H.264 format.

  4. “Then why does everything I pirate come in AVI files and not mp4 files? If mp4 (h.264 (with the lowercase h)) is so good then why haven’t the pirates switched?”

    Most pirates rip to the lowest-common denominator hardware. H264 is on the horizon as the next big thing. As soon as another generation of hardware takes over from the last, you will start seeing a lot more H264 and a lot less AVI.

    Right now H264 format is used pretty heavily in two categories: high-quality fanboy-rips of cult/classic films and rips of Japanese anime (series & movies).

  5. Stefan: Because the transition hasn’t been done yet.

    Standalone DVD-players can often play MPEG-4 Part 2 (“DivX” / “Xvid”), but not H.264. And H.264 requires more system resources to decode than MPEG-4 Part 2, you need a fairly recent computer to be able to decode high resolution H.264-video fast enough.

    The release-groups are already using H.264 for their high-resolution releases. H.264 is by far superior to MPEG-4 Part 2, contending that is just absurd. And H.264 is not tied to the MP4 container-format, most releases are in a Matroska container.

    Some examples of releases from last night in H.264:

  6. The thing is, h.264 requires more powerful hardware than DivX, and there is simple inertia at play, too. It’ll take a few years yet to become prevalent, and then there is the container issue (at least in the p2p scene, where MKV is the most popular one for big size files)

  7. “Then why does everything I pirate come in AVI files and not mp4 files? If mp4 (h.264 (with the lowercase h)) is so good then why haven’t the pirates switched?”

    YouTube is going H.264; the stuff you watch– I won’t speculate on its nature– will follow.