DivXNetworks Closes $6 Million In Second Round Funding;

Market Wire, June, 2002

Following the wildly successful launch of the DivX 5.0 product line and an aggressive move into the consumer electronics space, DivXNetworks, Inc. today announced the close of a Series B funding round totaling $6 million dollars. The Company will use the funds to support expanded marketing, sales, and product development efforts, as well as international expansion into Asia and Europe. DivXNetworks created the revolutionary patent-pending DivX (TM) video compression technology, with over 60 million users worldwide.

Los Angeles based Zone Ventures leads investment in the second round with significant contribution from the WI Harper Group, a leading venture capital fund based in San Francisco and Greater China. Additional investors include Draper Atlantic, Wasatch Venture Fund, and a personal investment from venture capitalist Tim Draper. This B round of investment, which brings the total amount of equity financing for DivXNetworks to over $11.5 million, is expected to bring the company to cash positive.

The funding close follows several major company achievements, including the record-breaking launch of the new DivX 5.0 suite of video compression technologies, successful international business development efforts, and significant traction in embedded systems and consumer electronics. DivXNetworks recently announced a partnership with digital device company e.Digital to jointly develop and market a range of consumer electronics devices that playback DivX (TM) video, with the first device expected to reach market by the end of the year.

"The remarkable success of our DivX 5.0 product line, currently one of the most downloaded apps on the Web, and the traction we have built in the international market validates our technology strength and broad consumer appeal," said Shahi Ghanem, chief operating officer of DivXNetworks, Inc. (www.divxnetworks.com). "We've worked diligently to build and deliver the world's best suite of video compression technologies, and we've also been fortunate to work closely with well known and savvy investors who have a firm grasp of the opportunities present in the digital video space in the U.S., Asia and Europe. This cash infusion coupled with their support will allow us to quickly grow our business to meet their pent up demand for DivX video in these key markets."

"We believe that DivXNetworks has what it takes to be extremely successful in the long-term and we're excited to play a continuing role in the development of this innovative company," said Frank Creer, managing director of Zone Ventures (www.zonevc.com). "DivXNetworks' core technology and unique product offering will drive the future of video convergence by delivering high-quality, secure content over broadband networks and embedded systems with incredible performance and cost-efficiency. The company has a very strong leadership team in place to sustain and increase their significant technological advantage"

Peter Liu, Chairman of the WI Harper Group (www.wiharper.com), added: "DivXNetworks offers a core technology with proven value in the global marketplace, as well as an excellent team and the solid business strategy necessary to dominate the digital video space. Due to the superior quality, performance and compression of DivX video, there is enormous potential for DivX-powered products and applications, and we are excited to work together with DivXNetworks to help deploy this cutting-edge technology into new markets such as Greater China."

Consistently ranked as the third most downloaded application on the Internet by CNet's Download.com, DivX is the world's most advanced and widely used MPEG-4 compatible digital video compression technology with over 60 million users worldwide. The most recent version of the technology, DivX 5.0, has been extremely successful since it's release on March 4th, with over 1.5 million downloads in the first two days of release alone. DivXNetworks has also created a full line of products based on the leading DivX (TM) technology. The company's video-on-demand product, the DivX Open Video System, is a complete solution for the delivery of protected, DVD-quality video over IP networks, with over 20 content partners currently licensing the system.

About DivXNetworks

DivXNetworks is a leading technology company that enables the rapid proliferation of video content over Internet Protocol (IP) networks by combining the lightweight, ubiquitous access of the Internet with DVD-quality video performance. The company's approach is built upon the success of the DivX(TM) codec, a leading standard for MPEG-4 video distribution with over 60 million users worldwide, and the DivX Open Video System(TM), a next-generation content delivery system that provides unsurpassed aggregation, promotion, and distribution of video content for mass markets. DivXNetworks is headquartered in San Diego, California, with a satellite office in Los Angeles. For more information about DivXNetworks, visit www.divxnetworks.com.