The DivX Open Video System: A Forerunner of the Streaming Revolution

Video streaming services have never been more popular than they are now. With dozens of different streaming providers, it feels like virtually every movie or television show ever created is available for anyone to watch, anytime on any device. But the streaming video nirvana that we now take for granted seemed like a distant dream back in 2001 when a brash San Diego start-up company created one of the first Internet-based video-on-demand platforms. 

streaming platforms
Some of the many, many streaming options we enjoy today.

The DivX® Open Video System — first introduced nearly twenty years ago — pioneered many of the technology innovations and product features that would become key components of the services we now use every day, helping lay the foundation for a massive change in media distribution and consumption.

It all started with a codec. In 1999, Jerome “Gej” Rota, a young French animator, created a version of an MPEG-4 video codec  (a portmanteau of “coder/decoder” that encodes a data stream for transmission and then decodes it for playback) that enabled DVD-quality video at small file sizes.  Jerome started a company with a few other budding technology entrepreneurs, and in August 2001 DivX 4.0, the first official DivX codec, was released to the public. The Internet video community responded with great enthusiasm, and DivX soon became the standard for full-length, high-quality video transferred over peer-to-peer networks. 

DivXNetworks, the company behind DivX, had been working in parallel to create an Internet-based video-on-demand system that built upon the quality and performance of the DivX codec. The goal was to create an end-to-end system for the secure sale and rental of feature films over the Internet. Due to the inferior quality of incumbent technologies, industry concerns about the effectiveness of existing digital rights management solutions, and the lack of universal broadband access, Hollywood studios and content creators had been slow to embrace an Internet based video-on-demand strategy.

The DivX Open Video System sought to address these concerns by implementing a few key innovations: 

  • A flexible, key-based digital rights management system that tied purchased content to a user rather than a device, making the videos more secure while improving the viewer experience.
  • A core codec that offered industry-best compression and performance enabling full-screen, DVD-like quality that was vastly superior to the pixelated, postage-stamp size viewing experience associated with Internet video at the time.
  •  A “progressive download” feature that allowed the viewer to begin watching a purchased or rented video after only a few minutes while the file continued to download in the background. Downloading a full-length feature film over early broadband connections could take 45 minutes or more, and at the time users were accustomed to waiting until the download was complete to begin viewing.

The development of the DivX Open Video System (OVS) was led by Director of Engineering Eric Grab and a team of dedicated programmers, codec engineers and video technologists. Eric and DivX co-founders consulted with the MPAA and Hollywood studios before beginning development to better understand the needs and concerns of the film industry and created a digital rights management system tailored to address those needs. “We worked hard to understand the very real concerns that Hollywood had about security, and we took those concerns seriously. The digital rights management solution we created tried to balance the concerns of rights holders with the needs of the viewer, and I think we got that balance right,” said Grab.

A small start-up where each employee wore many hats, the entire company participated in the development and testing of the OVS. Employees volunteered to stay after hours conducting QA, testing playback quality and logging bugs. “It was a true team effort,” recalls Tom Huntington, an early DivX marketing employee. “Everyone did their part to help the product get over the finish line, and we all believed deeply in what we were doing.”

Meanwhile, the small DivX sales team met with every film studio and content distributor they could find. The big studios were intrigued by the technology but still hesitant to dip their toes in the waters of online distribution, in part out of fear of cannibalizing the then booming DVD business that was bringing in record revenues. Smaller production companies and distributors proved more open to the idea, and several signed up as launch partners.

On September 6, 2001, the DivX OVS officially launched with partner Strand Releasing, an independent film distribution company. The first feature film available on the platform was called “World and Time Enough,” offered as a five-day rental for $4.95 on the Strand Releasing web site. Several more companies followed suit, and over the next few years thousands of independent titles were sold and rented by DivX OVS partners. 


With the launch of the DivX Certification program for consumer electronics devices in 2003, support for DivX DRM was built into every DivX Certified device, ensuring customers could play back DivX OVS titles on their televisions. Hundreds of millions of devices spanning virtually every major CE manufacturer were released supporting DivX OVS playback over the following decade and beyond. Today, there are over 1.5 billion DivX Certified® devices shipped worldwide. 

The DivX OVS was one of the first commercially available Internet-based video-on-demand platforms, enabling viewers to experience high-quality feature films in an entirely new way. Far ahead of its time, the DivX OVS launched a time where broadband Internet access was not yet ubiquitous, in a business environment where Hollywood studios were not yet ready to embrace digital distribution for a variety of reasons.

In 2007, a full six years after the launch of the DivX OVS, Netflix introduced streaming to their platform, eventually proving successful in breaking the loggerhead that kept Hollywood from embracing digital distribution. Many of the features that we take for granted in our everyday video consumption were pioneered by the DivX OVS, from DVD-quality picture over IP networks to flexible, transparent DRM and the ability to watch a purchased or rented title on multiple devices. “When I look back on it now, it’s clear that we were ahead of our time in a number of ways,” Grab said. “I’m proud of the work our team accomplished, and it’s gratifying to see the vision we had for the future of video come to fruition.”

The moment before everyone argues about which streaming service to watch.

The Birth of the DivX Revolution

Jerome and his alter ego, "Gej"

Jerome Rota didn’t set out to create a digital video revolution—he just wanted to show off his work and maybe attract a few clients along the way. In 1999, Jerome (nicknamed “Gej”) was a young compositing animator and video engineer living in Montpellier, France. Fresh out of school, Jerome was looking to create an online portfolio that would showcase the video and animation work he was doing for various clients.

The state of the Internet in 1999, needless to say, was quite different than it is today. Dial-up was still the primary connection method for most users (broadband was a luxury that wouldn’t roll out to the mainstream for a few years yet) and the idea of high-quality video over the Internet was a novelty, at best. Streaming video, to the extent that it existed, meant grainy, postage-stamp size blips in the corner of the screen. 

But things were starting to change. A group of leading technology companies had collaborated to create a new video compression standard called MPEG-4 that promised to deliver high-visual quality at file sizes small enough to distribute online. Microsoft released an early version of an MPEG-4 compatible video codec (a portmanteau of “coder/decoder” that encodes a data stream or signal for transmission and then decodes it for playback) that looked encouraging, and for the first time high-quality Internet video seemed like a realistic proposition.

Circuit City DIVX
Circuit City’s failed DIVX product

That’s where Jerome came in. He played around with an early MPEG-4 codec while putting together his video portfolio but was dissatisfied with some of the settings and format options. After a few hours of tinkering, he created a version that produced the kind of quality and compression performance he was after. Jerome called the codec “DivX ;-)”, a tongue-in-cheek reference to an early competitor to the DVD format from Circuit City called DIVX that was widely reviled by the online video community for its cumbersome digital rights management restrictions. Not thinking too much about it, he shared his creation with a few fellow video technology buffs online and went about his business.

It wasn’t long before “DivX ;-)” found its way into the wilds of the Internet and was widely adopted in video technology circles for its ability to create highly compressed video files that maintained visual quality at small file sizes. In true viral Internet fashion, millions of people were using the codec to encode and share DVD-quality videos over newly created peer-to-peer networks, and a true cultural phenomenon was born. “This is hard to believe,” Jerome is quoted as saying at the time. “It grew all by itself.” (CNET, 2002).

Young American entrepreneur Jordan Greenhall watched the DivX ;-) phenomenon grow with great interest from across the sea in San Diego, California. An early executive at streaming music pioneer MP3.com, Jordan had turned his interests toward video and thought DivX ;-) might be just the thing to ignite a still nascent industry. After much searching through the untamed IRC channels that made up the online digital video community at the time, Jordan attempted to track down Jerome.  “Nobody knew whether he was real,” Greenhall is quoted as saying (CNET, 2002). Eventually, Jordan managed to get in contact with Jerome and suggested they form a company, create a new codec from the ground up that would build on Jerome’s version, and see where it all went. 

Despite some early reservations, Jerome soon agreed to give it a shot. Before he knew it, he was boarding a plane bound for San Diego, with nothing but a couple of bags and a pack of cigarettes in his pocket. Jordan recruited Project Mayo logothree other budding technology entrepreneurs, and together the five co-founders launched a stealth start-up known as “Project Mayo,” the company that would one day become DivX®, Inc.

It was agreed from the beginning that the team would create a new codec from the ground-up that built on the work Jerome had created. Toward that end, the team went about the work of tracking down and recruiting the best video codec engineers they could find from all around the world. Soon, Jerome and company had assembled an international team of video technologists from multiple countries, including Italy, France, England and Russia, and brought them to San Diego to collaborate on the new project.

Without an office space to call their own, the team rented a house in the Mission Beach area of San Diego. Fueled by burritos and local craft beer, the global crew worked around the clock to create a codec that built on the MPEG-4 standard with innovative, proprietary features that improved compression and performance. The first iteration of a new codec was released as an open-source project by the Project Mayo team in January 2001. Called “OpenDivX”, the codec was a kind of “alpha” version designed for community feedback and testing. After a few beta releases, DivX 4.0, the company’s first official product, was released on August 22, 2001

The new codec was MPEG-4 compliant but featured significant performance and quality improvements. This included new features such as 4x improvement in encoding speed, multi-pass encoding and two different variable bit rate modes, improved visual quality and de-interlacing. DivX 4.0 was an immediate hit with the digital video community thanks to its groundbreaking ability to enable near DVD-quality video over the Internet, which was virtually unheard of at the time. “Our remarkably talented team of codec engineers and video technologists has worked tirelessly to optimize the performance, speed and quality of the codec, and we’re amazed by the result of those efforts,” Greenhall said at the time. (DivX 4 Press Release)

In the first five months it was available online, DivX 4.0 was downloaded over 5 million times, and subsequent versions of the codec would go on to reach over 1 billion downloads (and counting). The codec was licensed to numerous software companies, including CyberLink and Magix, for use in video editing and playback products, used by leading video game companies such as Blizzard for in-game cinematics, and was the foundational technology that enabled the DivX Open Video System, the company’s video-on-demand platform. Future versions of DivX technology were integrated into over 1.5 billion consumer electronics devices, enabling Jerome, Jordan and team to build a massively successful company that would go public on the NASDAQ stock exchange six years after the team first got together. 

Twenty years after the first DivX codec was released, the name DivX is still synonymous with high-quality video. DivX continues to innovate in order to deliver groundbreaking experiences to consumers around the world. 

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“It was just a good codec,” Jerome said at the beginning of the DivX era in 2001. “I made it for me, for my infographiques.” (Salon, 2001). The rest, as they say, is history.

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