Predictably, DIVX has generated a storm of indignation. "It's another misstep in this very confused product launch," Chris McGowan, author of Entertainment in the Cyber Zone, says diplomatically. John Thrasher, Vice President of Video Sales for Tower Records/Video was even more blunt when speaking to Video Business Magazine: "From my perspective, it's just another failed format waiting to happen." It's no surprise that companies like Tower and Blockbuster should oppose this new standard; video rental businesses make extraordinary amounts of money on overdue videos, and don't like the notion of studios cutting out the middle man by selling videos over the telephone lines.

While few consumers are likely to shed tears over the decline of the video rental business, the confusion and competition over DVD and DIVX is likely to slow the launch of the DVD standard.

Toshiba's SD2107 and SD3107 DVD players. © Toshiba.

Stage Four: Beware The Ideas Of Christmas
Toshiba and Warners plan a $30 million holiday advertising blitz, including television, print, POP (point of purchase -- those stand-up cardboard monsters in your video store) and ads on all Warner Videos one may happen to rent or buy. Some of these ads are already out on video cassettes; they feature a family nearly blown out of their seats by their own DVD-driven home theater system. The appeal of these ads is clearly toward younger audiences. The spot emulates the mind-numbing visceral quality of gaming platform television advertisements that have aired over the last few years.

Other companies are getting into the act; most studios plan releases of DVD movies for Christmas. Ingram and Toshiba have partnered for demonstration kiosks in retail outlets, and Philips has joined with Polygram in a similar venture. Even Buena Vista, who has announced that they will release their Disney animation classics only on DIVX, is hedging their bets by releasing some movies on DVD.

Videophiles, those "early adopters" that the industry relies on, may just sit this Christmas season out. They are justifiably leery when every month brings news of a fresh advance. "I'm happy with my laser disc," says prototypical early adopter Josh Catalfo, of Davis, California, indicating that he has no intentions of buying a set-top DVD in the immediate future. "I'm going to wait on DIVX and see if they improve the mastering quality." Clearly, the consumer electronics industry has not factored in the fact that early adopters are among the best informed buyers.

Christmas can be deadly to consumer electronics when expectations are hyped. CD-ROM pioneer and leading developer Jerry Borell reminds us of last year's debacle for the CD-ROM market. "Eighteen wheel trucks were returning (the software) in droves," he points out. "Software suppliers didn't pay the developers or paid them pennies on the dollar. Going into this season there are unpaid debts from last year." While it can be argued that the diffused CD-ROM industry is fundamentally different from a mass market, the lesson is a sober argument not to put all the eggs in one basket.

"I hope the industry and public will be realistic and give the industry a couple of years," worries Tonya Bates of VideoScan.

Stage Five: Laser Rot
For those not familiar with the term, laser rot is what happens when moisture gets between the layers of a laser disc, damaging or ruining the picture quality. It is the metaphorical equivalent of what has happened to this once viable market of videophiles and the 9,000 titles available to them. "A lot of people are really hurting," admits Judy Anderson of the Optical Video Disc Association, once the standards organization for the market.

Where Are These People Buying Their Crystal Balls?
Given the fact that the wars are not over, it's hard to see where the market will be in five years, much less make any predictions. Nevertheless, the industry has generated a virtual hailstorm of felicitous predictions without factoring in the idea that a competing standard would be announced just as DVD was launched.