DIVX wasn't a competing format to DVD, in fact it used DVD media. It was meant to be a competitor to video rental stores, and to pay-per-view for people that didn't have cable or satellite TV. The premise is you could "buy" the disc for $5 and take it home with you, and that purchase included the first 48-hour viewing period, but you didn't have to watch it that day. You could pick it up when grocery shopping on a Monday and watch it with the family that following weekend without needing to make a special trip to the rental store. To add to the convenience, you didn't have to take the disc back to the rental store, so no late fees or being forced to purchase an expensive rental-licensed disc because you forgot or lost the disc. You could simply throw the disc away, give it away, or keep it in your movie library, and if you wanted to watch it again you just paid for another 48-hour viewing period. Obviously they wanted you to keep it so you'd pay for more views, or pay the permanent unlock fee. A big drawback is the unlock fee only covered your own player, so if you loaned the disc to a friend they'd have to pay the viewing fee even if you already paid to permanently unlock it.

If I remember right, when DIVX shut down they had to pay people that paid for the permanent unlock back a portion of their money, but I'm sure many lost out because they didn't pay the claim in time or other various reasons.

There was another attempt at "convenience" rentals by a company that used degrading discs. You'd pay $5 for a movie at a store, and it came in a sealed package. As soon as you broke the seal, the data on the disc was exposed to oxygen and would start to fade away and be useless after a few days. The idea behind this is you could buy a rental of the movie at a convenience store and never need to return the disc, just throw it away when done. It was pushed at truck stops too, so that drivers could rent the movie and not have to worry about returning it to the local movie store that may be a couple thousand miles away when it was due back. It didn't catch on because some players had a hard time reading the discs even when freshly unsealed, and they also found that the discs degraded over time even when still factory sealed, so if a movie sat on the shelf for too long before being purchased, it was useless. There was also pushback due to the concern of added plastic being added to the waste stream to fill up the landfills.