DivX's acquisition of MainConcept greatly strengthens its position in online video

Implications: Even though DivX has a very strong position in video technology, it has been challenged by competitors in the area of webpage embedded video, particularly by Flash of Adobe. The recent acquisition of MainConcept by DivX will greatly strengthen DivX's position, and may potentially change the landscape.

Analysis: DivX has a very strong position in video technology. However in some of the market segments, particularly the webpage embedded video, DivX has been challenged by competitors. For example, Flash by Adobe has a dominant market share benefiting from their installation base. DivX has developed competing technologies as showcased on the Stage6 web site, but it is not adopted as widely as Flash so far.

The webpage embedded video market is one of the important segment, after they are popularized by YouTube and the entire group of Web 2.0 companies. This market segment will continue to grow at a tremendous rate.

DivX's acquisition of MainConcept can potentially change the landscape. Flash has moved away from proprietary technology of On2 into the standard based technology H.264. The H.264 implementation used in Flash is from MainConcept, according to its webpage. The acquisition might imply that soon the technologies that drive all the webpage embedded video will be from DivX regardless of whether they are in an Adobe product or in a DivX product. This would greatly strengthen DivX's position in online video.