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More than a year after YouTube won the online video sharing sweepstakes by rolling up a huge audience and selling out big, the ramifications continue to be felt. Revver was sold earlier this month for a reported $5 million. And today, DivX said it would shut down its Stage6 online video sharing site eight months after originally seeking to unload it. Dan Rayburn neatly sums up the reason for the failure:From the get go the service was destined to fail as DivX was using the site to showcase their own technology. The problem being that if the only way you can try to showcase adoption of your technology by content owners is by running your own website, it won't work.
I don't know for sure whether DivX tried to pay an investor or company to take Stage6 off its hands. It had previously allocated $4 million in costs to pay for a proposed spinoff last year so it seems clear it was prepared to help shoulder the costs. It changed course in December and said it would consider other alternatives. Presumably, those didn't pan out. What are you going to do with a third-tier online video sharing site that's going to burn cash from day one?
The notice on the Stage6 web site announcing that Stage6 would be shuttered on Thursday has elicited 3272 comments in just eight hours. Most are not sympathetic. One user wrote, "3 days notice. Thanks a lot S***face." - Joshua Jaffe
Joshua Jaffe is general manager of TechConfidential.com.
