Short Cable

DivX Considers A Profitable Break-Up, But Are There Any Long Term Benefits?

I was particularly concerned with Jordan Greenhall leaving following the Stage6 spin-off announcement. It gave me the impression that the person with the vision that created the CE licencing strategy saw a brighter future for the video site, than he did for the licencing business. Recent developments are making me wonder if this is really a head fake to help maximise the value of Stage6 while it is being spun-off/sold.

The Qualcom, LG, Samsung announcements in the cell phone market, and D-Link with DivX Connected seem to be ample evidence that the licencing end is progressing nicely. The major risk here was being pigeon holed into the shrinking DVD player market. Microsoft using Sigma Designs DivX enabled chips for their media extenders may not mean a DivX logo on their products, but inclusion in devices that support multiple codecs is crucial for 'common media language' to reach fruition. Recent news making Wii into a DivX capable media streamer indicates that xBox and PS3 are not unlikely to follow suit.

The deal this week with Yahoo really creates room for speculation for the future spi-off of Stage6. Google grabbed a lead in net video by buying YouTube that Yahoo cannot ignore. By announcing the spin-off DivX posted a 'For Sale' sign on Stage6. Placing Greenhall as its head clearly stated that it was not a fire sale.
I would like to return to the profits and amazing margins that DivX posted in its first couple public quarters, but I hope that they do not rush the sale of Stage6. A partner/purchaser like Yahoo could make the explosive traffic growth of the past 6 months seem mild.