Our take...
The move follows an unsuccessful attempt to re-launch the online video service. In October 2008 the company replaced its desktop download client with a browser-based streaming service, later embracing viral distribution, making videos embeddable, and abandoning a sign-in policy which required users to log into their account (and first-time users to register) before they could view videos, but still the portal failed to gain traction. In March 2009, six months on from the re-launch, the company streamed 15m videos worldwide. This translates into less than half the average number of videos streamed via Hulu, according to Screen Digest analysis, and Hulu videos are only available in the US.

The portal has suffered the same fate as many independent start-ups that have come before it, struggling to attract an audience – even when offering content for free on an ad-supported basis – without the established brand of a network portal (or YouTube, which built an online brand with user-generated video) or the content offering of the studio-backed Hulu. Joost did manage to acquire rights to premium content from Paramount and Sony Pictures in some markets, but these studios have not renewed their deals.

Joost will find competition on the tech side no less intense. In addition to the established service providers in this space, Joost will have to do battle with the growing number of companies moving into this market. Among its rivals will be Brightcove, which made a similar move – having tried to launch a destination site, it closed it down at end 2008 to focus on its software-as-a-service business. Many of the companies entering this market are better positioned than Joost – commercial content delivery networks (CDNs), for instance, are increasingly offering online video services alongside their core business. Joost has its own CDN; its founders own the Joltid peer-to-peer product on which Joost was originally built, and the company has also developed video ad overlay technology, which could present licensing opportunities.