Actually as far as I heard, h264 is mostly better then Mpeg4 when you are dealing with low bitrate low resolution stuff. So especially for video content for mobile phones, Apple products, dvb-h, dvb-sh, then it makes more sence to use h264, quality savings are like 40% on sub 500kbit/s stuff.

As for DVD resolution stuff and HD resolution stuff, quality doesn’t get much improved with h264 as far as I’ve heard. For DVD resolution and HD resolution high bitrate stuff, h264 is only something like 10% better then DivX 6 Mpeg4 simple profile AVI. Quality improvements for such high bitrate high resolution content isn’t worth the much increased hardware requirements to play it back.

So I think DivX 6 will continue to be a good choice for DVD and HD quality stuff to be distributed over the Internet. Which DivX 7 h264 will be better for stuff targetted to low bitrate and low resolution, as well as for stuff for broadcast distribution such as DVB, HDDVD/Blueray and such which have chosen to use H264 since even though quality improvement might only be 10%, since it’s a new standard and people buy new hardware anyways, then the industry chose to just as well choose the best quality possible.

Historically, Divx started with a hacked version of MS’s Windows Media V7 codec and switched to MPEG-4 when they went legit. Since then, they have focussed on developing efficient encoders for MPEG-4 Part 2 (MPEG-4 Advanced Simple Profile/Main Profile).

While MPEG-4 Part 2 gives 30 – 50% coding effciency improvement on top of MPEG-2, H.264 aka MPEG-4 Part 10 ofers coding effciency improvement upto 100% on top of MPEG-2 (i.e. 1/2 the bit rate of MPEG-2 for comparable quality).

Since DivX is essentially implementing standards based codecs for the past 5 years or so, we do need to acknowledge the standards community for enabling codec compnies such as DivX to provide high quality implementation of the standards. It’s not quite a case of H.264 being blessed by DivX… rather the other way around :)

Most pirates rip to the lowest-common denominator hardware. H264 is on the horizon as the next big thing. As soon as another generation of hardware takes over from the last, you will start seeing a lot more H264 and a lot less AVI.

Right now H264 format is used pretty heavily in two categories: high-quality fanboy-rips of cult/classic films and rips of Japanese anime (series & movies).

Standalone DVD-players can often play MPEG-4 Part 2 (“DivX” / “Xvid”), but not H.264. And H.264 requires more system resources to decode than MPEG-4 Part 2, you need a fairly recent computer to be able to decode high resolution H.264-video fast enough.

The release-groups are already using H.264 for their high-resolution releases. H.264 is by far superior to MPEG-4 Part 2, contending that is just absurd. And H.264 is not tied to the MP4 container-format, most releases are in a Matroska container.

Some examples of releases from last night in H.264:
The.Office.S04E08.720p.HDTV.X264-DIMENSION
Supernatural.S03E07.720p.HDTV.x264-NBS
Smallville.S07E08.720p.HDTV.x264-NBS

YouTube is going H.264; the stuff you watch– I won’t speculate on its nature– will follow.