Divx Announces Highly Successful National Launch

DIVX Press Release for January 7, 1999

Divx Announces Highly Successful National Launch

Digital Video Express, LP announced today that in the first three months of national availability, October through December, Divx retailers sold close to 90,000 Divx-enhanced DVD players, with more than 60,000 sold in December alone.

"Sales of DVD players with the Divx feature exceeded our expectations, particularly given the intensely competitive environment over the holiday selling season," said Richard L. Sharp, chairman and chief executive officer of Divx. "We believed that we had a compelling proposition for consumers, and obviously a great many movie lovers agreed with us. But these sales are only the beginning. We are confident that momentum for the Divx feature will continue to build."

Sales Statistics

Sharp said the following results clearly indicate that the Divx feature can grow demand for DVD beyond the early adopter:

Holiday Season Sales

This past December, more than 62,000 Divx-enhanced DVD players were sold by the seven primary Divx retailers (i.e. Circuit City, the Good Guys!, Ultimate Electronics, Future Shop, DOW Stereo/Video, Nationwide and Sixth Avenue).

Overall Sales

From October 1 through December 31, 1998, approximately 87,000 Divx- enhanced DVD players were sold by these retailers

October - 7,000 November - 18,000 December - 62,000

Disc Sales

During the fourth quarter, approximately 535,000 Divx discs were sold.

During December, approximately 375,000 Divx discs were sold.

"These extremely strong sales numbers are especially gratifying given the limited retail distribution and brand selection, as well as aggressive promotion for basic DVD," Sharp said. During the holidays, Divx-enhanced DVD players represented less than 10 percent of the total model selection in the marketplace and were available at less than 10 percent of the retail locations selling DVD players.

Other Divx Retailers

Other retailers carrying Divx-enhanced DVD players also reported positive results. "The Divx share of our DVD mix accelerated throughout the holiday selling season," said Robert A. Gunst, president and chief executive officer of the good guys! a 79-store consumer electronics retailer headquartered in the San Francisco Bay Area. "We have been especially pleased by the sales performance of the ProScan model, which has a feature set that is particularly appealing to the good guys! customers."

"Our primary motivation for carrying Divx was our belief that the feature would grow the entire DVD business, and that is exactly what our experience has been," said Dave Workman, president of Denver-based Ultimate Electronics.

"We believe that the affordability offered by Divx software is helping to bring more customers into the DVD market," said Kevin Layden executive vice president, Future Shop. "We are very pleased with our growth in the entire DVD hardware category, including those units with the Divx feature."

"We are extremely pleased with the sell-through of Divx," said Tom Campbell, corporate director at DOW Stereo/Video in Southern California. "We not only sold out of our initial order of players, but we are convinced that Divx is contributing to greater interest in the DVD category as a whole. Divx sales went well beyond our expectations."

New Hardware Manufacturer

Divx said that a seventh consumer electronics manufacturer -- Kenwood U.S.A. Corp., one of the nation's premier makers of home audio/video products -- will add the Divx feature to its line of DVD players. Divx-enhanced DVD players from Kenwood are expected to be available by year's end.

"For more than 37 years, consumers have looked to the Kenwood name for home electronics products that are well crafted, high-performing and rich in features," said Joe Richter, president of Kenwood U.S.A. "We believe that adding the Divx enhancement to our line of DVD players will broaden interest in watching movies in a digital format, and we are pleased to offer our customers the Divx option later this year."

With the Kenwood announcement, four brands of Divx-enhanced players -- JVC, Pioneer, Harman/Kardon, and Kenwood -- will become available in 1999, joining the existing brands RCA, ProScan, Panasonic and Zenith.

HD-Divx

Divx also announced that it was pleased to be selected by Thomson Consumer Electronics to provide content protection for delivering disc-based high- definition material.

"We are proud to be participating with Thomson on the cutting-edge of DVD technology, in terms of the quality, convenience and security of high-value digital content," Sharp said.

At a separate press conference, officials from Thomson provided a demonstration of the HDTV-Divx player, which is expected to be available to consumers by early 2000.

Retail Programs

Divx also announced a first-of-its-kind Internet distribution program designed to make carrying Divx movie discs easier for smaller retailers. By setting up special accounts through the Divx Web site, retailers will be able to place orders online. Discs would subsequently be shipped directly from the Divx distribution center.

To assist potential hardware retailers on the sales floor, Divx also showcased a new interactive kiosk. In addition to demonstrating the high resolution of DVD picture and the power of Dolby Digital surround sound, the kiosks will provide consumers with more detailed information about Divx through a series of interactive menus and screens.

Digital Video Express, LP is a partnership between Richmond, Va.-based Circuit City Stores, Inc. (NYSE: CC, KMX), a leading national retailer of brand-name consumer electronics, personal computers, major appliances and entertainment software, and a prominent Los Angeles entertainment law firm.

This release contains forward-looking statements, which are subject to risks and uncertainties, including, but not limited to, risks associated with the development of new business concepts and risks associated with year 2000 issues. Additional discussion of factors that could cause actual results to differ materially from management's projections, forecasts, estimates and expectations is contained in the SEC filings of Circuit City Stores, Inc. SOURCE Digital Video Express, LP

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