DivX pirates raid Hollywood

He has a point: What quickly appears on his PC's monitor, by many people's estimation, simply shouldn't be possible technologically.

It is the opening credits of "The Matrix," in a complete, high-quality reproduction that takes up the entire computer screen and comes with booming stereo sound. The remarkable thing is that the movie isn't being played from a high-capacity digital video disk, the sort rented from a video store, but from a regular compact disk, the sort that can be "burned" by any of the hundreds of thousands of homes and offices equipped with PCs and writeable CD drives.

Hollywood, your nightmare is here. Thanks to two pieces of software -- one "liberated" from Microsoft Corp. (msft) by a global underground of video buffs and computer hackers -- high-quality digital movies, available on a variety of Web sites, can be stored in 10 percent to 20 percent of the space that had been required just six months ago. That means that PC users with high-speed DSL or cable-modem connections can download a full-length movie such as "The Matrix" in an hour or two from a spreading network of illicit Internet sites. The entire film can fit on a single CD or be stored on the computer's hard drive.

The new technology has been dubbed DivX, but is unrelated to the abandoned alternative to DVDs that bore the same name.

The movie industry assumed it would be years before studios faced the sort of digital piracy that is giving the music industry ulcers through sites like Napster. That's because, in contrast to MP3 music files, DVD movie files are extremely large and require many hours, even days, to download. The thinking had been that movie piracy wouldn't be a big problem until most homes had the networking connections fast enough to allow movies to be passed around as easily as music files are on Napster.

Now, though, with movie file sizes shrinking because of DivX, Hollywood may be facing its version of Napster in months, not years. What's more, a properly prepared DivX movie is nearly as good as a DVD in quality. That's a sharp contrast to an earlier generation of grainy pirated movies available on the Net, some of which were created by camcorder-equipped movie pirates who sneaked into theaters. "Right now, DivX is where MP3s were when they first came out. It took a while for people to catch on, but it's gaining fast," says Jan Devos, who runs a Web site that is devoted to the new video software but doesn't offer pirated material.

The first of the two pieces of software that make DivX possible is a computer program called DeCSS, which breaks the encryption that is supposed to prevent DVD files from being copied onto a PC in the first place. Several big movie studios have gone to court to try to block the spread of the DeCSS code, although it is readily accessible through Internet search engines such as that of Yahoo! Inc. (yhoo).

A DVD typically stores close to 5GB of data, and many movies are easily that long. Making a high-quality copy at smaller sizes -- close to the 650MB capacity of conventional CDs -- is the major breakthrough of the new DivX format. That's where the Microsoft software comes in: It compresses digital video files down to a more manageable size. The program is Microsoft's version of MPEG-4, a standard video-compression system used in the computer industry.

Microsoft released the software last year, intending it only for software developers. But Jerome Rota, a 27-year-old French film buff and video engineer who goes by the Internet nickname of "Gej," worked with a German hacker named "Max Morice" to rewrite the software so that anyone can use it to create compact DivX movies. He also coined the DivX name, which is officially written as DivX ;-) in a mocking reference to the earlier DivX, which had stressed its anti-piracy features.

Microsoft says it will go after anyone it catches pushing the DivX software, but it has yet to take action. Anyway, that may soon be a moot point: Rota is busily working on a completely legal implementation of the DivX idea that won't use Microsoft technology at all. In fact, he was in San Diego this past weekend, meeting with American technology experts and financiers who are putting together a company to pursue digital video -- one of several groups doing so. The company's working name is ProjectMayo.com.

"DivX was just the beginning," Rota said in a poolside interview. He sees a multitude of completely legal uses for the technology, ranging from Hollywood studios distributing movie trailers to newlyweds sending wedding videos to friends.

Right now, though, what is generating all the buzz is DivX as a handy way to pirate movies. The Internet chat rooms known as IRC channels are full of people offering DivX movies for trading; nearly all popular movies available in DVD form are listed. Some Web sites also have full DivX movies available for downloading, although they tend not to be operational very long and their addresses are usually only passed around among insiders. And software-trading systems like Gnutella and Scour list growing numbers of DivX titles.

Many DivX sites don't offer pirated movies and appear to be operating legally. They keep people up to date about developments of the technology, post DivX movie trailers and offer tutorials in playing, as well as making, DivX files.

The tutorials are crucial. Most PC owners lack the two pieces of software needed to play a DivX movie and must download them. To create a DivX movie from a DVD is, for the moment at least, a complex and error-prone process that can take six or eight hours. (Making a music CD, by comparison, is a one-button operation that takes a few minutes.)

Even with fast Internet connections, downloading a DivX movie is still more of an ordeal than most computer users would want to put up with, especially since movies can be rented for a few dollars. But MP3s were similarly complicated in the early days. And computers and networks continue to increase in capability at remarkable rates, as does video-compression software. Rota predicted the first version of his company's software, due out in a few months, would offer better video quality, require less storage space and be simpler to use than the current DivX.

"[The technology] is moving extremely fast," says Jack Valenti, chief executive of the Motion Picture Association of America, the Hollywood trade group. He says he is watching the emerging DivX scene closely: "I worry about the possibility that what happened to music will soon be happening to movies."