CarMax 1999 Annual Report Download - page 16

14 CIRCUIT CITY STORES, INC. 1999 ANNUAL REPORT
In our Circuit City store operations and throughout the company, we
are continuously looking for opportunities to bring new benefits to
the consumer. Digital Video Express is one of these opportunities.
Divx takes the digital-quality video and audio of DVD and adds a
home movie-viewing capability that is affordable and more convenient
than any available in the marketplace today. For the millions of con-
sumers who are renting movies today and want to economically build
a library of selected titles, Divx is indeed “the best way to watch
movies at home.”
SIMPLICITY, QUALITY AND CONVENIENCE
When shopping for DVD players, consumers now have a number of
features to consider. They may decide between single disc and multi-
disc players. They may choose DTS-compatible or Dolby Digital-
only players. And now, they may choose players with or without the
Divx feature. If they choose a player with the Divx feature, they gain
access to a whole new way of home movie viewing.
Using a Divx-enhanced DVD Player. Purchasing and using a Divx-
enhanced player is simple. Players can be purchased at approximately
800 retail outlets nationwide. After purchase, the customer takes the
player home and connects it to his or her television and then to a
phone line, in a manner similar to the phone connection for direct
broadcast satellite systems. The customer then uses an on-screen
menu to register the player through a connection with the Divx call
center. With that simple phone call, the customer is ready to begin a
dramatically improved home video experience.
Benefits of Divx. The Divx-equipped player will play basic DVD
discs, Divx discs and audio CDs. DVD discs are the same size as an
audio CD. They combine outstanding picture clarity and color
sharpness with the digital sound of a CD. Most basic DVD discs
are available at sell-through prices in the $20 to $25 range and at a
number of video rental outlets. Divx discs provide the same quality
video and audio capabilities of a basic DVD but are targeted to the
video rental market.They are available for a suggested retail price of
$4.49, which includes a two-day viewing period that is initiated at the
customer’s convenience.
For the $4.49 price, consumers get high-quality digital picture
and sound, plus a more convenient, flexible viewing time than offered
by VHS or DVD rental or by pay-per-view. Consumers buy Divx discs
whenever it is convenient to shop. Unlike video rentals, the Divx
viewing period begins not when consumers leave the store, but when
they first insert the disc into their player and push play. After that
point, consumers have a 48-hour window in which they can watch the
movie as many times as they want. Unlike pay-per-view, the consumer
can rewind, scan or pause the movie or even finish watching it the next
day. And, in contrast to video rental, the movie never has to be
returned, which eliminates all late fees and allows consumers to build
an inexpensive home library. Subsequent two-day viewing periods
cost only about $3.25, and favorite movies can be converted to unlim-
ited viewing for play on any Divx-equipped player registered to their
account. Consumers also can recycle or trade discs with friends, who
can utilize the lower-price subsequent viewing periods. The consumer
receives all of the benefits of Divx for only about one dollar more than
the price of a VHS rental.
On a monthly basis, the Divx-enhanced DVD player uses the
phone connection to automatically transfer viewing information to
the Divx billing computer. Payment is made through the customer’s
DIVX The best way to watch movies at home