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Stage6 was supposed to be a higher-quality YouTube, and while the site had decent traffic, it never caught fire. As a publicly traded company, DivX felt added pressure to perform, and in July of last year the company said it would spin off Stage6 in a move to decrease operating expenses. The spinoff was supposed to be done by the end of last year.
Stage6 also had legal issues. DivX filed a pre-emptive lawsuit to protect against “unreasonable threats and demands” from Universal Music Group back in September. But the company lost that legal gambit earlier this month.
Given all that, putting Stage6 out of its misery is the best option for DivX as it can now focus entirely on its licensing business. The company made a number of deal announcements at CES this year, among them a partnership with Sony Pictures, as well as a raft of distribution partnerships with Next New Networks, Vuze, Veoh and Jaman for its DivX Connected media player.