The mere sight of these two codecs has people wondering whether they are the same thing. There are also plenty of people who say divx when they think xvid and all in all, it has been a big mess overall. In this article we are going to clear up everything that concerns this issue of whether these two are the same codec, or if we are talking about two separate codecs.
Well, the simple truth is that, while they do sound very similar, these are two entirely different codecs, being developed by different companies. The interesting thing here is that the people who are behind the xvid codec were once working on the divx codec.
It all started in the 1990s when a guy called Jerome Rota from Montpellier in France developed DivX ;-*) by hacking the MPEG-4 video codec. The reason behind this was that he simply wanted to be able to play his own video portfolio which was encoded with MPEG-4 and the existing windows media player didn’t want to play it. The job was done in a day.
This later lead to the further developments of the codec which became more and more sophisticated. During this period, the divx codec was known as opendivx codec as it was open source. However, over the years, it because a 
part of a company and it is no longer open source software. An important moment came in 2001, when an improved version of the divx codec came out under the name encore2. It is that this new encore2 code that some of the people from the openDivx project took and started making their own codec, under the name xvid.
Therefore, these are two entirely different codecs and the main difference is that the divx codec is owned by the Divx.inc, which is a company and that it is not an open source software, while xvid has remained such a software and it can be used by anyone for free. These codecs are today the two leading codecs and they are the most used codecs in the world.