DivX (DIVX)

*Our March 2009 promotion and distribution agreement with Google may not prove to be an adequate replacement for our September 2007 agreement with Yahoo!.

Pursuant to our September 2007 agreement with Yahoo!, we agreed to distribute a version of Internet Explorer browser optimized for Yahoo! and a co-branded version of the Yahoo! Toolbar with our software products and Yahoo! agreed to pay us fees based on the number of certain distributions or installations of the Yahoo! software. In November 2008, Yahoo! notified us that they intended to breach the two-year advertising services agreement and would discontinue making payments required under the agreement. As a result, we have filed a lawsuit in California Superior Court seeking damages from Yahoo! and specific performance under the agreement. Revenues under our agreement with Yahoo! represented approximately 22% of our total revenue in the three months ended March 31, 2008 and 19% for the year ended December 31, 2008. Following Yahoo!’s discontinuance of payments under the agreement in November 2008, revenues under our agreement with Yahoo! represented 0% of our total revenue in the three months ended March 31, 2009. In March 2009, we entered into a new promotion and distribution agreement with Google. Pursuant to this new agreement, we have agreed to distribute Google products, including its new web browser, Google Chrome, and the Google Toolbar for Internet Explorer, with our software products and Google has agreed to pay us fees based on successful activations of these products. We may not have accurately modeled the Google deal and it may prove to be worth less than we anticipate over time. Also, if Google’s products do not prove to be as popular among consumers as we anticipate, if our products decline in popularity among consumers, or if Google’s products quickly reach market saturation, we may experience a decrease in revenue under our agreement with Google as compared to our previous deals.

Our March 2009 promotion and distribution agreement with Google may not prove to be an adequate replacement for our September 2007 agreement with Yahoo!.

Pursuant to our September 2007 agreement with Yahoo!, we agreed to distribute a version of Internet Explorer browser optimized for Yahoo! and a co-branded version of the Yahoo! Toolbar with our software products and Yahoo! agreed to pay us fees based on the number of certain distributions or installations of the Yahoo! software. In November 2008, Yahoo! notified us that they intended to breach the two-year advertising services agreement and would discontinue making payments required under the agreement. As a result, we have filed a lawsuit in California Superior Court seeking damages from Yahoo! and specific performance under the agreement. Revenues under our agreement with Yahoo! represented approximately 19% of our total revenue in the year ended December 31, 2008. In March 2009, we entered into a new promotion and distribution agreement with Google. Pursuant to this new agreement, we have agreed to distribute Google products, including its new web browser, Google Chrome, and the Google Toolbar for Internet Explorer, with our software products and Google has agreed to pay us fees based on successful activations of these products. We may not have accurately modeled the new deal and it may prove to be worth less than we anticipate over time. Also, we have not yet completed all of the implementation required to enable us to distribute these Google products, and if we fail to successfully complete such implementation, if we fail to effectively transition our products to the Google offerings, or if there is an undue delay in such implementation or transition, it may impact the amounts we receive under the deal. Further, if Google’s products do not prove to be as popular among consumers as we anticipate, if our products decline in popularity among consumers, or if Google’s products quickly reach market saturation, we may experience a decrease in revenue under our agreement with Google as compared to our previous deals.

Our March 2009 promotion and distribution agreement with Google may not prove to be an adequate
replacement for our September 2007 agreement with Yahoo!.

Pursuant to our September 2007 agreement with Yahoo!, we agreed to
distribute a version of Internet Explorer browser optimized for Yahoo! and a co-branded version of the Yahoo! Toolbar with our software products and Yahoo! agreed to pay us fees based on the number of certain distributions or installations of the
Yahoo! software. In November 2008, Yahoo! notified us that they intended to breach the two-year advertising services agreement and would discontinue making payments required under the agreement. As a result, we have filed a lawsuit in California
Superior Court seeking damages from Yahoo! and specific performance under the agreement. Revenues under our agreement with Yahoo! represented approximately 19% of our total revenue in the year ended December 31, 2008. In March 2009, we entered into
a new promotion and distribution agreement with Google. Pursuant to this new agreement, we have agreed to distribute Google products, including its new web browser, Google Chrome, and the Google Toolbar for Internet Explorer, with our software
products and Google has agreed to pay us fees based on successful activations of these products. We may not have accurately modeled the new deal and it may prove to be worth less than we anticipate over time. Also, we have not yet completed all of
the implementation required to enable us to distribute these Google products, and if we fail to successfully complete such implementation, if we fail to effectively transition our products to the Google offerings, or if there is an undue delay in
such implementation or transition, it may impact the amounts we receive under the deal. Further, if Google’s products do not prove to be as popular among consumers as we anticipate, if our products decline in popularity among consumers, or if
Google’s products quickly reach market saturation, we may experience a decrease in revenue under our agreement with Google as compared to our previous deals.

SIZE="2">The success of our business depends on the availability of premium video content in the DivX format.

To date, only two major motion
picture studios have agreed to make certain video content available in the DivX media format. If we, and/or our consumer electronics partners or retail partners, fail to implement certain technological safeguards mandated under those deals, such
format approval agreements may be suspended or terminated, either of which could negatively impact our business. The implementation of these changes could potentially be viewed negatively by consumers and as a result our business could
suffer. Additionally, the distribution of such DivX-formatted video content is dependent on third party retailers’ willingness to enter into distribution deals with one or more of our studio partners and DivX and ultimately upon the
willingness of consumers to purchase such content from such third party retailers. Finally, our business success depends upon

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our ability to reach agreement with other major motion picture studios to make their content available in the DivX media format. In the event that we fail to
reach agreement with such studios, the DivX format may become less compelling to consumers and to retailers and potentially to consumer electronics licensees of DivX.

FACE="Times New Roman" SIZE="2">The success of our business depends on the interoperability of our technologies with consumer hardware devices.

SIZE="2">To be successful we design our digital media platform to interoperate effectively with a variety of consumer hardware devices, including personal computers, DVD players, DVD recorders, network connected DVD players, high definition DVD
players, digital still cameras, digital camcorders, portable media players, digital TVs, home media centers, set-top boxes, video game consoles, and mobile handsets. We depend on significant cooperation with manufacturers of these devices and the
components integrated into these devices, as well as software providers that create the operating systems for such devices, to incorporate our technologies into their product offerings and ensure consistent playback of DivX-encoded files. Currently,
a limited number of devices are designed to support our technologies. If we are unsuccessful in causing component manufacturers, device manufacturers and software providers to integrate our technologies into their product offerings, our technologies
may become less accessible to consumers, which would adversely affect our revenue potential.

Our March 2009 promotion and distribution agreement with Google may not prove to be an adequate
replacement for our September 2007 agreement with Yahoo!.

Pursuant to our September 2007 agreement with Yahoo!, we agreed to
distribute a version of Internet Explorer browser optimized for Yahoo! and a co-branded version of the Yahoo! Toolbar with our software products and Yahoo! agreed to pay us fees based on the number of certain distributions or installations of the
Yahoo! software. In November 2008, Yahoo! notified us that they intended to breach the two-year advertising services agreement and would discontinue making payments required under the agreement. As a result, we have filed a lawsuit in California
Superior Court seeking damages from Yahoo! and specific performance under the agreement. Revenues under our agreement with Yahoo! represented approximately 19% of our total revenue in the year ended December 31, 2008. In March 2009, we entered into
a new promotion and distribution agreement with Google. Pursuant to this new agreement, we have agreed to distribute Google products, including its new web browser, Google Chrome, and the Google Toolbar for Internet Explorer, with our software
products and Google has agreed to pay us fees based on successful activations of these products. We may not have accurately modeled the new deal and it may prove to be worth less than we anticipate over time. Also, we have not yet completed all of
the implementation required to enable us to distribute these Google products, and if we fail to successfully complete such implementation, if we fail to effectively transition our products to the Google offerings, or if there is an undue delay in
such implementation or transition, it may impact the amounts we receive under the deal. Further, if Google’s products do not prove to be as popular among consumers as we anticipate, if our products decline in popularity among consumers, or if
Google’s products quickly reach market saturation, we may experience a decrease in revenue under our agreement with Google as compared to our previous deals.

SIZE="2">The success of our business depends on the availability of premium video content in the DivX format.

To date, only two major motion
picture studios have agreed to make certain video content available in the DivX media format. If we, and/or our consumer electronics partners or retail partners, fail to implement certain technological safeguards mandated under those deals, such
format approval agreements may be suspended or terminated, either of which could negatively impact our business. The implementation of these changes could potentially be viewed negatively by consumers and as a result our business could
suffer. Additionally, the distribution of such DivX-formatted video content is dependent on third party retailers’ willingness to enter into distribution deals with one or more of our studio partners and DivX and ultimately upon the
willingness of consumers to purchase such content from such third party retailers. Finally, our business success depends upon

16

Table of Contents

our ability to reach agreement with other major motion picture studios to make their content available in the DivX media format. In the event that we fail to
reach agreement with such studios, the DivX format may become less compelling to consumers and to retailers and potentially to consumer electronics licensees of DivX.

FACE="Times New Roman" SIZE="2">The success of our business depends on the interoperability of our technologies with consumer hardware devices.

SIZE="2">To be successful we design our digital media platform to interoperate effectively with a variety of consumer hardware devices, including personal computers, DVD players, DVD recorders, network connected DVD players, high definition DVD
players, digital still cameras, digital camcorders, portable media players, digital TVs, home media centers, set-top boxes, video game consoles, and mobile handsets. We depend on significant cooperation with manufacturers of these devices and the
components integrated into these devices, as well as software providers that create the operating systems for such devices, to incorporate our technologies into their product offerings and ensure consistent playback of DivX-encoded files. Currently,
a limited number of devices are designed to support our technologies. If we are unsuccessful in causing component manufacturers, device manufacturers and software providers to integrate our technologies into their product offerings, our technologies
may become less accessible to consumers, which would adversely affect our revenue potential.