The Web video portal shakeout continues: DivX will shut down Stage6, its would-be YouTube rival, to focus on its video encoding software/licensing business. The company (Nasdaq: DIVX — $430 million market cap) tried to sell/spin off the site last July, but couldn’t find a buyer. Instead it will shutter the service on Thursday.
Why? Because unless you can reach massive scale, which Stage6 didn’t, hosting Web video is a money-losing proposition. “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,” the company said this morning on its blog.
Brightcove made a similar decision last November, shutting down its Brightcove.TV site to focus on its (very successful) business-to-business division, powering Web video for the likes of The Wall Street Journal. We expect to see more shrinkage and shutdowns sooner than later.
More details about the Stage6 closure may emerge during Divx’s Q4 earnings call on March 11.
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