DivX, the digital video company behind the compression scheme of that name, has acquired MainConcept, a specialist provider of encoding systems. The purchase is valued at $22 million in stock and cash, with a further incentive payment of up to $6 million. Adobe recently licensed MainConcept software for the MPEG-4 AVC codec known as H.264 for inclusion in its Flash product.

The addition of compression software from MainConcept is expected to extend the reach of DivX to additional platforms and formats.

Kevin Hell, the chief executive of DivX, described the acquisition as “highly complementary to the core DivX licensing business”. He said their H.264 technology is “expected to increase our market opportunity and speed our penetration of key emerging product categories, including mobile, HDTV, set-top boxes and digital still cameras.”

Markus Moenig, the founder of MainConcept, and now senior vice president at DivX, also described the product suites and business models of the two companies as “highly complementary”. He said: “our combined companies offer a rich solution for the creation, distribution and playback of high-quality video across virtually any platform or device.”

DivX is perhaps best known for its proprietary format similar to MPEG-4 that allows video data to be highly compressed. A number of DVD players support the format. Over 100 million DivX certified devices have been sold.

MainConcept is based in Germany and is one the leading providers of H.264 encoding software, among a wide range of other compression schemes. Its customers include Adobe, Microsoft, Sony and Panasonic.

The valuation of $22 million seems relatively modest. The strategic acquisition by DivX will enable DivX to move beyond DVD players into other markets. It suggests that the company views the MPEG-4 AVC or H.264 open standard as the compression scheme of choice in the future.

The H.264 standard is subject to a patent pool licensing scheme that is operated by the MPEG LA licensing authority.