Stage6 Goes Dark, and Google Big Oversight

Feb 29th was a sad day for video piraters and the mass viewers of Stage6's high quality video format, when the service went dark after a 6 month effort to sell the one of a kind video sharing site. What made Stage6 so good? It was the DIVX format and its embeddable player.

Back in the days of Kazza and other peer-to-peer file sharing networks, DIVX was crowned king of video for making it possible to fit a feature length movie on a single CD. The company's main business model exploded world wide, as it found an army of eager hardware manufactures to license the format for their devices. Today divx is found everywhere from DVD players to handheld devices and mobile phones, which is why Google missed the boat not acquiring the service and its technology.

For all the great aspects of YouTube, the video player’s quality is far below that of Stage6. Even when DIVX is used to upload content to YouTube, the encoding to flash leaves a lot to be desired.

Without Stage6 will divx remain the best video compression format available? Will other pick up the format for new high end video sharing sites? Or will the format got he way of Bata? One this is for sure, iTunes and their iTV quicktime formats are the big winners here.

The following is the letter set to Stage6 publishers on Feb25th:

I'm Tom (aka Spinner), a Stage6 user and an employee of DivX, Inc., the company behind the service. I'm writing this message today to inform you that we plan to shut down Stage6 on February 28, 2008. Upload functionality has already been turned off, and you'll be able to view and download videos until Thursday.

I know this news will come as a shock and disappointment to many Stage6 users, and I'd like to take a few moments to explain the reasons behind our decision.

We created Stage6 with the mission of empowering content creators and viewers to discover a new kind of video experience. Stage6 began as an experiment, and we always knew there was a chance that it might not succeed.

In many ways, though, the service did succeed, beyond even our own initial expectations. Stage6 became very popular very quickly. We helped gain exposure for some talented filmmakers who brought great videos to the attention of an engaged community. We helped prove that it's possible to distribute true high definition video on the Internet. And we helped broaden the Internet video experience by offering content that is compatible with DVD players, mobile devices and other products beyond the PC.

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. There are a lot of other details involved, but at the end of the day it's really as simple as that.

Now, why didn't we think of that before we decided to create Stage6 in the first place, you may ask? That's a good question. When we first created Stage6, there was a clear need for a service that would offer a true high-quality video experience online because other video destinations on the Internet simply weren't providing that to users. A gap existed, and Stage6 arrived to fill it.

As Stage6 grew quickly and dramatically (accompanied by an explosion of other sites delivering high-quality video), it became clear that operating the service as a part of the larger DivX business no longer made sense. We couldn't continue to run Stage6 and focus on our broader strategy to make it possible for anyone to enjoy high-quality video on any device. So, in July of last year we announced that we were kicking off an effort to explore strategic alternatives for Stage6, which is a fancy way of saying we decided we would either have to sell it, spin it out into a private company or shut it down.

I won't (and can't, really) go into too much detail on those first two options other than to say that we tried really hard to find a way to keep Stage6 alive, either as its own private entity or by selling it to another company. Ultimately neither of those two scenarios was possible, and we made the hard decision to turn the lights off and cease operation of the service.

So that's where we are today. After February 28, Stage6 will cease to exist as an online destination. But the larger DivX universe will continue to thrive. Every day new DivX Certified devices arrive on the market making it easy to move video beyond the PC. Products powered by DivX Connected, our new initiative that lets users stream video, photos, music and Internet services from the PC to the TV, are hitting retail outlets. We remain committed to empowering content creators to deliver high-quality video to a wide audience, and we'll continue to offer services that will make it easy to find videos online in the DivX format.

It's been a wild ride, and none of it would have been possible without the support of our users. Thank you for making Stage6 everything that it was.

--Tom

Two Big Changes in the World of Video Advertising

So this was a big weekend for online advertising. On Friday Revver announced the start of their pre-roll CPM ad delivery program, and over the weekend Google opened its CPA network to more users including the T-Cast Network.

For those of you who don't know what all the acronyms are all about, don't worry we were all there at some point. CPM is "cost per 1000 impressions" meaning it pays the publisher every time its seen 100 times. CPA is "Cost Per Action" meaning it pays the publisher when the viewer clicks the ad, goes to a site and completes some action. CPA pays better but is harder to convert, while CPM pays poorly but consistently.

Sites like AtomFilms have been using pre-roll ads for years, but with viewer attention spans so soft, Revver went with the video first approach. Pre-roll CPM changes all that.

Revver's pre-roll CPM program is a divergence from its traditional business model and they are going to great lengths to insist that the ads will remain non-obtrusive. The plus side is producers will now be paid every time their video is played (albeit a small amount), this is good news because well over 50% of the time viewers don't watch the video to the end and therefore never see the ad. Hopefully this new product will prop up producer's falling earnings on the network.

Google has been pilot projecting their referral or CPA ad network for years with products like Adsense, Adwords and Firefox, but has now expanded to an impressive array of products to promote on publisher sites.

One major problem with CPA networks like AzoogleAds.com and RockitProfit.com is that promotions are localized geographically and rarely allow international traffic. Google's CPA network takes care of that and provides a rotator for the ads repeated visitors are exposed to different ads. Many offers pay for people signing up for a free account on photo-sharing and dating sites.

Payments on Google's Adsense content network have bottom out making it hard for publishers to continue to run CPC context sensitive ads. Now with the improved Revver and Google ad programs, producers of original video content can monetize their traffic more successfully...or at least that's the promise.

There are some noticeable holes right off the bat. Revver is its classic form launched its program without updated analytics so producers will have no idea how many pre-roll ads are shown or how much of their money is coming from the CPM ads. Not all videos are used for the program, videos under 30 seconds are understandable not used, but no other details are given for video selection.

The Google Referrals network has a bit of a weak interface, the ads lack variety in their creatives, and the ads seem to pay slightly lower than other CPA networks.

Still big changes all around, Revver still hasn't had to content with Google directly, but that day will come. Google's own pre-roll video ad network is known to be in small scale testing, likely several years away from launching to the masses of producers.

Revver the next Google purchase, or maybe Stage6?

Google has build an empire on buying up the best innovations and integrating them into a vast advertising network. Providing free content and making billions for it. In a lot of ways Revver has what Google wants, a better player, CPC based auto insertion ad technology, and a pile of copy-right responsible content.

At T-Cast, we like the Revver model and wish them success. But there are problems with the things as they are. There is still no analytic reporting for video syndication and the revenue from those clicks is not broken down for either the syndicator or the content producer. Value of clicks are falling, but then are still better than most of the adwords content market with pay-per-click of $0.12 to $0.27.

It would seem to be smarter for the content producer to sell their own advertising, and the T-Cast producers asked Stage6's Divx support team for just such an opportunity only to be disappointed with the response. No question that the Divx authoring software is the best encoding software out there for under $50, and the Stage6.com site has proven that the player is post-roll clickable. Content producers could be running their own advertising campaigns off a wide variety of CPC, CPM and CPA advertising networks, and Divx HD quality video would be everywhere. Stage6 could be Revver for the masses.

Google needs to figure this out or it could get away from them. And there are other divx encoders out there. One of these companies has to put internet video syndication and dynamic advertising together before some hacker does.