This week ZVUE (formerly Handheld Entertainment) let it be known that Nasdaq had warned the company it was at risk of being delisted for dropping under $1 per share for the last month. The holding company runs a variety of online entertainment sites, including eBaum’s World (our story on its $15 million-plus-earnouts acquisition) and Putfile (our story on its $7.1 million acquisition).
Other publicly traded companies with core business in online video have ditched the business altogether, citing financial pressures and legal concerns. GoFish told us in January it couldn’t differentiate in the online video space (it had also been sued by Universal Music Group) so it was turning into an ad network. DivX closed down its video-sharing site Stage6 in an attempt to decrease operating expenses. And more than incidentally, that site was also in a legal tussle with UMG. At last check, shares of DivX shares were trading at $7.24, off a 52-week high of $22. GoFish shares, which trade on the over-the-counter market, were lower as well.
Elsewhere, Blinkx is trading at £16.50 on the London Stock Exchange, down from its 52-week high of £79. Perhaps still trying to hang onto the glow of its IPO last May, the company hasn’t updated its stock price on its web site since then.
To be fair, online video — especially as a business — is nascent, and the public markets aren’t being kind to anyone these days. And these four companies are not the cream of the online video crop. But as we reported yesterday, venture capitalists continue to pour money into the space, and at an increased rate. Without the option of public markets, and with big media companies finally getting the hang of things on their own, will the online video backers stick around for the long haul? This question has big implications for companies like Metacafe, Veoh and Dailymotion, which continue to do well, but not well enough. What do you think?