DivX, the San Diego-based online video codec and technology firm, whose stock has been languishing for the last few months (it went public late last year), has decided to spin-off its online video sharing site Stage6 into a separate company.

DivX plans to focus on “its high margin, fast-growing technology licensing business by seeking to separate Stage6 into its own private company,” the company said…meaning Stage6 is in tough competition, and would require more investment and focus, something DivX can’t really afford. “The success of Stage6 has been driving a significant increase in operating expenses, which has in turn impacted DivX operating income.”

DivX’s co-Founder and CEO Jordan Greenhall is stepping down to head Stage6. The separation will be completed later this year. Kevin Hell, the company’s President, has been named Acting CEO of DivX. Stage6 was launch in October last year, and the company says has been getting good traffic. The new company will raise more funding to compete in the crowded market. More info in release.