Who says nothing good comes from getting deadpooled? Blake Machado was the winner of a YouTube announcement contest we held a couple weeks back. He was the first to guess correctly that YouTube would come out with some new APIs to spread its influence over the web. The prize was an iPod shuffle. Turns out YouTube’s announcement was particularly poignant for Blake given his connection to the previous deadpooled Stage6. As he revealed to us after winning: Ironically guessing/winning this is bitter-sweet. I was the PM of Stage6 and this is an area where we had planned to beat YouTube to the punch and gain some, hopefully, extremely positive results. We would have as it was scheduled for Feb. release — oh well. So how’d we comfort him in his time of need? Etched a reminder of that deadpooling into his “consolation” prize, of course. You’re welcome, Blake. → Read More
After we thought the bizarre story of Stage6 was over, Brad Greenspan’s LiveUniverse has gotten involved, and the plot gets even thicker. According to a release from LiveUniverse, the company offered to acquire Stage6 prior to the site being shut by DivX 25 February. The offer was $11 million in cash & carriage plus an equity Stake in Stage6 and Promotion of DivX Software. LiveUniverse then claims that the DivX Board “refused to engage in any direct dialogue with LiveUniverse for over 5 days, and during this time, DivX shuts down Stage6.” Despite the site being shut for nearly 2 weeks, LiveUniverse still wants to buy it and is appealing to DivX shareholders to pressure the company into selling. DivX shareholders can visit www.livevideo.com/SaveStage6” to take initiative and proactively push the Board to do the right thing for shareholders.” LiveUniverse is claiming that “despite daily outbound calls and emails, LiveUniverse was and is unable to reach any of the DivX executives including General Counsel David Richter who LiveUniverse was originally referred to for the purposes of buying Stage6.” The go on to say that “Directors of public companies have a fiduciary duty to shareholders to try to get the best deal and represent their interests, first and foremost” and “DivX Board’s decision to destroy website and its community when there was and is a firm superior offer on table from LiveUniverse raises questions of whether proper sales process was followed.” The one part missing from LiveUniverse’s statement is why? why do they want to buy Stage6? Sure, it was a great site with a ton of traffic, but it was only great because it offered a BitTorrent style smorgasbord of pirated content without the need to download it. Without the pirated movies, the traffic on Stage6 means nothing. Either LiveUniverse knows something we don’t about the site, or they’re taking a big risk. CrunchBase Information DivX LiveUniverse Stage6 Brad Greenspan Information provided by CrunchBase → Read More
Yesterday San Diego based DivX announced the shutdown of popular video site Stage6, to the surprise and dismay of the site’s 17.4 million happy monthly visitors (the post on the shutdown has over 5,000 comments). There’s lots of speculation around why DivX is shutting the site down, ranging from piracy issues to the spiraling CDN costs of streaming all that HD content. But what really happened, according to multiple sources, is that a ridiculous battle of egos at the DivX board level caused most of the team to simply quit. DivX, essentially, snatched defeat from the jaws of victory. First a bit of history – just before DivX went public in late 2006 it launched Stage6 as a way to show off the capabilities of the DivX codec. Without any promotion at all the site quickly gathered users. By mid 2007, when the site went into beta, it had millions of users and tens of millions of page views. The high quality video was key – users simply flocked to it. DivX cofounder and CEO Jordan Greenhall knew he had a potential hit on his hands. He decided to explore a sale of Stage6, and hired investment bank Montgomery & Co. to see who might buy it. He also started pitching VCs on the idea of funding it as a spinoff. Given the conflict of interest, he resigned as CEO of DivX – president Kevin Hell took over the company. Darrius Thompson, (DivX co-founder), Mark How (DivX VP Business Development), Mark Chweh, Chester Ng and about 20 other DivX employees joined him. All shared the title of “cofounder” at Stage6. Montgomery spent the second half of 2007 pitching Stage6 to buyers, although there wasn’t much interest. But VCs were eager to buy in to the idea of a spinoff. By November they had commitments from Crosslink Capital, Sofinnova France and Mission Ventures to invest $20 million at a $90 million post money valuation. Another $5 million was committed from a strategic investor, plus $2 million more from “friends and family.” All in all, Stage6 was preparing to close a $27 million round. DivX was to retain 20% ownership in the new funded entity. Not only was DivX to receive a substantial chunk of equity in the new company, they’d be able to get the operating costs, estimated to be around $1 million/month in CDN costs alone, off their books. And → Read More
We covered Stage6, a DivX-owned site, in October 2006 as part of a roundup of up and coming video sites. The site, which allowed users to upload video in the high quality Divx format, streams video that makes YouTube look shabby in comparison. The site won’t be around long, though, Uploads have already been shut down, and the site itself will go offline on February 28. The official reason: “So why are we shutting the service down? Well, the short answer is that the continued operation of Stage6 is a very expensive enterprise that requires an enormous amount of attention and resources that we are not in a position to continue to provide.” Translated, that may be that the pirates took over the site. New movies and tv shows were constantly being uploaded and then taken down by the site staff. Sites like Joox.net took all that pirated content and repackaged it on their own site. The combined costs of hosting, plus all the monitoring for infringement, may have been more than Divx was willing to deal with. Update: Ok, we’ve been shaking the trees on this story a little. According to one source, the planned spinoff of Stage6 from DivX apparently had $24 million or so in committed venture capital but negotiations with the DivX board broke down over ownership percentages. We’re still digging. Update2: Comscore says Stage6 has 17.4 million monthly unique visitors and 360 million page views. We also hear that their monthly CDN bill from LimeLight is $1 million, about 11% of their revenues. That’s going to hurt them. CrunchBase Information Stage6 DivX Information provided by CrunchBase → Read More
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