Divx and Stage6: Chock Full of Fail

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 |  About: DivX, Inc. (DIVX)
by: Mathew Ingram

I’ve been dying to use that headline for days, ever since I saw someone use it in a comment on a Read/Write Web post about Google Docs, and if even half of what Mike Arrington says about the closure of Stage6 is true, then Divx (Nasdaq: DIVX) deserves the “epic fail” tag for sure. After writing about business for almost 20 years, I’ve heard a lot of dumb stories about boardroom sideshows, corporate intrigue and personal vendettas and this one appears to rank right up there with the worst.

Stage6 was a popular and widely-respected video hosting site, one of the first to offer full, high-definition video. Launched as a showcase for the Divx compression standard, it wasn’t designed to be a money-maker, but after it got a lot of attention the company apparently decided to spin it off, and Divx co-founder Jordan Greenhall took it over with some staff from the company and prepared to launch with financing from VCs and other investors. And then the train seemed to leave the tracks.

Despite the fact that the spinoff would bring in revenue for the company, and get the cost of streaming all that HD off its books, Divx apparently decided at some point to cancel the deal and keep Stage6 in-house. Now, even more inexplicably, they are shutting it down — presumably because it was costing too much money to run. What a waste. It’s possible that Stage6 might never have actually made it as a business, but to yank people (and investors) around like that is a pretty childish way to run a company. Whoever is responsible should be ashamed.