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DivX informed investors that in July 2007 "the Company's board of directors approved a plan to separate the Company's Stage6 operations into a separate private entity". Co-founders Darrius Thompson and Jordan Greenhall (who stepped down as DivX CEO) together with a team of around 20 other DivX employees then raised nearly $27M in funding to separate Stage6. Allegedly, after a battle of egos the DivX board cancelled the spin-off at the last minute causing key Stage6 founders to resign and most of the Stage6 team to quit.
"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 Stage6 was to give most of their 2008 revenues back to Divx as well."
DivX also generates revenue by bundling software from Yahoo! with their downloads. Techcrunch reports, "Our sources estimate that half that, or around $8 million/year, was due to Stage6 downloads. And that share was growing — 2008 toolbar revenues may have been as high as $10 million, making Stage6 almost breakeven.". SEC filings show that similar distribution of Google software by the company in 2007 accounted for approximately 20% of revenue.
The closure of Stage6 may lead to repercussions beyond the companies financial statements. Whereas distribution of Yahoo accounts for an estimated 20% of revenue, nearly all of the remainder is derived "from the licensing of our technologies to consumer hardware device manufacturers, software vendors and consumers", according to the SEC filings. Stage6 was to be tightly integrated with the recently announced DivX Connected platform, and DivX relies upon content created in its format to grow its licensing business. For the past 30 days Stage6.com has sustained an Alexa rank better than 100.
Techcrunch writes, "Three weeks ago, we hear, DivX re-approached Greenhall and asked if they'd like to do the original deal. Greenhall declined."... "At the end of the day DivX threw out the baby, the bathwater, millions of dollars in revenue and tens of millions of users."
If the Techcrunch story is accurate it would appear that DivX has been less than honest about the closure of Stage6 to their users, and that there may be questions for the DivX board surrounding their fiduciary duties and duty of care. DivX declined to comment on the Techcrunch article.
Might Stage6 still come back from the grave?"
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You'll need to get yourself an appointment first. No problem if you paid the extra 200 pounds for pro care; you can book up to 14 days in advance. If you're sane however, you can only make bookings for the same day on their website. I stayed awake til midnight a couple of times before I got fed up and realized that there's absolutely no point in trying.
I thought the idea was at some point: Walk into the store, make an appointment, come back later; but that's definitely not the case.
I used to have a dreadful Dell notebook, and while the thing itself was rubbish, the service was a lot better than what I experienced with Apple.