| XviD (http://www.xvid.org) is a new open source video codec, designed around the MPEG-4 video standard. Its main competition lies in the closed-source and non-free DivX codecs. While at the moment it is largely a subjective difference, XviD is generally considered to be a superior codec to DivX.
At present, XviD is still in heavy development, and has many major features yet to make it to the stable distribution. As such, it is almost certain to improve even more in the future. Already XviD has become one of the primary codecs used in movie encoding. Most notably, the recent ViTE release of The Two Towers is only available in XviD, with no DivX version produced.
Given this rampant success for such a relatively recent codec, there is little doubt that XviD will overtake DivX as the most commonly used video encoding format some time the next year. While this will hinge upon how much of an improvement the upcoming features bring to quality, judging by the feedback so far amongst the development community, things are looking rosy for XviD indeed.
As for how to use XviD, it is necessary to install the codec, as it is not included with Windows Media Player, and is not available through its automatic codec download either. At present the www.xvid.org web site only contains source packages, which are of no use to most users. However, a good binary install program is available from http://nic.dnsalias.com/ which will play XviD movies for you, without the hassle of compiling it yourself. As for encoding in XviD, this can be done using the Gordian Knot encoding software with the XviD codec installed (though there are many many other encoders out there as well). A good guide on how to easily encode a video to Xvid is available at Doom9 (http://www.doom9.org/index.html?/xvid.htm). | 
