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DivXNetworks announced a strategic licensing agreement with Fraunhofer Institute for Integrated Circuits IIS, inventors of mp3, and Thomson

The agreement will enable DivXNetworks, Inc. to include mp3 and, in the future, mp3 SURROUND technology, in all DivX(R) software and consumer electronics offerings, allowing over 160 million DivX(R) users the opportunity to enjoy the small file size and the high audio quality of mp3 SURROUND with their video files. Additionally, DivXNetworks, Inc. will now offer licensees a complete video and audio Software Development Kit (SDK).

Together, DivX(R) and mp3 technology offer the largest device compatibility on the market, giving integrated circuit manufacturers, consumer electronics companies, PC manufacturers, content creators and software vendors around the world a complete solution for the creation and playback of rich, full-featured digital video.

mp3 technology, which helped create the market for digital audio, is currently supported in hundreds of millions of consumer electronics devices worldwide. In December 2004, Thomson and Fraunhofer IIS launched mp3 SURROUND, which will enable 5.1 channel surround-quality sound for a broad spectrum of applications including web-based music distribution, broadcasting systems, PC-related audiovisual or gaming applications, consumer electronics and automotive systems. mp3 SURROUND supports high-quality multi-channel sound at bit rates comparable to those currently used to encode stereo mp3 material, resulting in files half the size of common compressed surround formats while offering complete backward compatibility to existing mp3 software and hardware devices.

DivX(R) technology, which enables the creation and playback of high-quality video files at a fraction of the size of competing technologies, is currently downloaded an average of 3 million times per month by consumers and is supported in over 20 million DivX Certified(R) consumer electronics products, including DVD players from major manufacturers. The new DivX(R) Media Format(TM), scheduled for release in the first quarter of 2005, is designed to enable the ultimate media experience with advanced new multimedia features including interactive video menus, powerful metadata and a balance of compression and visual quality superior to any other technology on the market.

"Adding mp3 SURROUND audio to the DivX(R) Media Format(TM) will improve the consumer experience throughout the connected home and ultimately help drive the distribution of secure premium content from the Internet to the living room," said Jordan Greenhall, CEO and co-founder of DivXNetworks, Inc. "This deal also has the potential to broaden the competitive technology options for video device manufacturers and premium content publishers, particularly in device categories such as digital still cameras, digital video cameras and recordable DVDs."

"Thomson and DivXNetworks, Inc. are making it easier for the entire digital video marketplace to provide the end consumer with a rich media experience," said Henri Linde, Vice President, Growth Initiatives, Audio & mp3 program of the Intellectual Property and Licensing unit for Thomson. "With our recent addition of the surround capability, mp3 is the perfect match for video content distribution in DivX(R) format. As mp3 helped create the market for digital audio, we believe that mp3, in conjunction with DivX(R) technology, will accelerate the emergence of a digital video distribution market."

"mp3 and DivX(R) technology both have a long history of successful platform integrations. Together this enables an easy technology transition process for the industry, and an easy upgrade from stereo to surround sound in consumer's homes, thus improving the consumer experience with this highly portable and widely compatible video format," said Harald Popp, Head of the Multimedia Realtime Systems Departments at Fraunhofer IIS. "We trust DivXNetworks, Inc. will integrate our mp3 technologies seamlessly to give the industry and the consumer an outstanding multimedia experience."

For more information on DivX(R) video technology, visit www.divxnetworks.com. To learn more about mp3 and mp3 SURROUND technology, see www.mp3surround-format.com.