Walt Disney Company announced last month that it will lend its support to the digital video disc (DVD) category, with the release of several live-action titles before the end of the year.

However, any celebrating that may have taken place by makers of DVD players was likely dampened by Disney’s simultaneous announcement that it will also support Divx, an even newer digital video format.

Paramount, Universal and DreamWorks have also endorsed Divx, the main selling point of which is that it will offer consumers the ability to purchase take-home video selections on an inexpensive pay-per-view basis.

Being brought to market by Digital Video Express, whose major backer is Circuit City, Divx players are expected to be available to consumers by the spring of 1998. While the system will initially cost about US$100 more than a standard DVD player, consumers will be able to buy a movie on a Divx disk for approximately US$5.

Warner Bros., DVD’s earliest supporter, has been promoting DVD movie titles at an average sell-through price of US$24.98.

The catch to the low price of Divx is that the video signal is programmed to last for only 48 hours after it is first viewed. After that, the signal becomes scrambled and the consumer can either throw the disk away or have the signal restored over a telephone line and be billed for the extension.

The news of Disney’s endorsement of Divx has been greeted with concern in some circles that the entertainment giant may be taking sides in what is shaping up to be an all-out battle of supremacy in the digital video market.

However, according to Tania Moloney, vice president of publicity for Disney’s Buena Vista Home Entertainment, the Burbank, California-based entertainment conglomerate will let consumers decide which of the two technologies will eventually appeal to them most.

Refusing to speculate which of DVD or Divx are likely to survive in the end, and insisting that Disney does not favor one technology over the other, Moloney says, ‘we just feel that we should make the product available in both formats, because both exist.

‘Our view,’ she adds, ‘is that we should make our titles available to consumers and that consumers should make the choice.’

Tom Adams, a close observer of the entertainment industry and president of Adams Media Research in Carmel Valley, California, says Divx and DVD technologies are actually ‘complementary’ to each other, although consumers will probably be confused about the two formats in the early going.

‘It’s way too soon to tell what consumer reaction is going to be,’ cautions Adams, pointing out that the most likely scenario over the short term is that the two formats will find their own place in the market, alongside traditional VHS video.

He explains that the nature of DVD is naturally more suited to the sell-through of post-theatrical motion picture titles, while Divx is much more likely to gain ground in what has been the traditional rental sector of the industry.

‘What’s likely to happen,’ says Adams, ‘is that if Divx catches on at all, there’ll be a Divx window that coincides with a VHS rental release, then later on, there’ll be an open DVD release of the same title at the sell-through price.’

The Video Software Dealers Association is on record as stating its disapproval of Divx, which it views as a potential threat to thousands of video rental outlets, whose businesses are wholly dependent on the need for videos to be returned to their source.