Divx was an outgrowth of the video codec Mpeg 4, which was hacked by Gej. Divx was named after the failed Circuit City venture that allowed DVDs to be played and discarded after a number of paid uses in divx players. Divx was cleanly written in version 4 so that legal hurdles in marketing could be bypassed. Hollywood because of high DVD sales didn't switch over to Mpeg 4, but instead stayed with Mpeg 2 leaving Divx Networks the only company developing the mpeg 4 standard thus giving it a competitive advantage to the licensing agreements it gave out once video on demand through a broadband connection became possible. Also, because of its continuing development Divx surpassed Mpeg 4 in quality, speed, portability, popularity, and acceptability. Because of the proliferation of Mp3 and it's use in piracy of music the RIAA is working with Divx Networks in developing digital rights management to be built in the codec.
DivXNetworks is working on H.264, a standard that compresses video by as much as 75 percent. The company believes that using such compression, a DVD stream can be pushed over the Internet at a magic 384 Kbps.
DVD rentals will lower because of the development and use of Divx, because it's much cheaper to own a DVD then to rent and copy one. Also, many airlines will adopt the codec in encoding movies on movie tablets, to reduce the cost of retrofitting their planes with video viewing headrest thus freeing passengers with the choice which movie they want to watch rather than regulating them to watch what everybody else watches. Because of Moore's law Divx will be able to reach more of the masses on more viewing devices than DVD does now. Because the movie industry gains 50% of its profits...