Short Cable

Is the Breakdown of Stage6 the Beginning of DivX's End?

“Even if the board disagreed with how much of an ownership piece they wanted to keep, wouldn't it have been better for DivX's long term future if they kept a small piece of a funded and vibrant Stage6 over giving up on all of their investment and closing down operations?”

Keeping the small piece may have been the deal breaker. I have a hard time seeing how a shut down is better than even the lowest price sale also. I can only think the legal liability, or conditions by Sony, and perhaps other content providers, were the deciding factors. I’m not sure how liability would differ from giving away and shutting down, but keeping a small stake would seem to be keeping all of the liability.

“If they were focused on growing the company, they would be using their cash to solidify their market opportunity instead of focusing on milking the existing business for cash to buy back stock.”

I agree with you there, but it does preserve value for the Institutions that are in control with 2/3 of the ownership. Most of them are looking at a loss so far, as am I.

The comparable business model here is Dolby IMHO. That seems to be underscored by the Main Concept buy. The value will be in the certification, not in a single codec, or video site. The new partners for DivX Connected are another sign, and partnerships to include additional codec such as VP6/7 might also be coming if that guess is right.

Consumers don’t want to know the details; they just want it to work. Brand recognition for consumer friendliness over proprietary codec superiority. Would it help Dolby to own a music sharing site?