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Joost to Woo TV Manufacturers

May 28, 2007  •  Post A Comment

Joost, whose initial forays into distributing TV shows on the Web have been complicated by technical glitches, is opening a new front in its campaign to elbow in on cable and satellite television.
The online TV service plans to approach consumer electronics makers in coming months to strike deals that would install Joost technology in TV sets and other gadgets, a company executive said. Such alliances carry the potential to bridge the chasm between computers and living-room televisions around the world.
“A year from now we hope you will see a lot more convergence in this area,” said David Clark, executive VP at Joost. “We hope you will see Joost in the living room.”
Joost founders Niklas Zennström and Janus Friis already have hastened the decline of established powers in two industries: music and long-distance telephony. Their file-sharing service Kazaa accelerated song-swapping and helped drive down music CD sales. Their other baby, Skype, undercut phone companies with Internet-based voice service.
The ambition of Mr. Zennström and Mr. Friis to invade living rooms via TV sets constitutes one of the clearest signs yet that Joost wants to be more than just the next YouTube or iTunes-Joost aims to be a global, Web-based TV pipeline.
“Our position is, someday Joost will be used by the vast majority of consumers as their primary entertainment platform, and as long as you have an Internet-connected device you have access to the Joost community,” Mr. Clark said.
Joost is among scores of companies staking claims in the future land of convergence, where audiences can consume video content wherever, whenever, however they please. Joost’s road to TV domination, however, may be strewn with technical and business obstacles even the demonstrated wizardry of Mr. Zennström and Mr. Friis can’t overcome.
The service, which reaches 500,000 test users, has frustrated some technophiles, who have blown off steam on Web-video chat boards. They chronicle a range of problems, noting they must constantly update the software without clear directions on how to do so. Unfamiliar navigation bedevils some and the service sometimes crashes. Media and Internet analysts also have complained.
Kaan Yigit, analyst with Solutions Research Group, said he stopped using the service after he encountered too many bugs and glitches.
“If you make it more complicated, even if the benefit is a better picture, there’s too much of a learning curve,” he said.
Joost and the Hollywood companies that supply it with shows are aware of the bugs.
“The software wasn’t launching and the video wasn’t playing,” Mr. Clark said. “That was a back-end system fix. Over time, what you are going to see is the system becomes more reliable and predictable and video quality improves and reaction time gets faster and there will be better performance.”
That answer satisfies Joost’s content providers, which include Viacom, CBS and Turner Broadcasting.
“Our technical folks believe it’s an excellent technology and architecture and they will solve the problems,” said Craig Hunegs, executive VP, business management, Warner Bros. Television Group.
Warner Bros. inked a deal earlier this month to include shows like “The Adventures of Briscoe County,” “Aquaman” and “Babylon 5” on Joost, which generates revenue via advertising.
Also, Warner Music Group is providing video content featuring its musical artists to Joost.
If consumers are willing to try Joost more than once, the service will be successful, said Keith Ritter, president of NHL Interactive CyberEnterprises. NHL also supplies content to Joost.
Joost has more than technical hurdles to overcome. Users soon will be clamoring for more content; in order to compete with cable and satellite, Joost will have to offer a menu as broad as those established providers. That means adding the likes of NBC, Fox and ABC to the Joost roster. But at the moment, NBC and Fox are focused on their joint online video venture, while ABC has been conservative with where it delivers shows online, preferring iTunes and ABC.com.
Joost counts some big backers in its corner, which may help give it leverage in talks to secure more shows. The company recently landed $45 million in funding from Sequoia Capital, CBS Corp., Viacom and others.
“It legitimizes them and says it’s about future things that are cool and not just tearing down the walls,” said James McQuivey, an analyst with Forrester Research. Joost’s success, however, hangs on its ability to articulate a strategy this year by which it will march into the living room, rather than dwelling solely on desktop computers and laptops, he said.
Competing for Carriage
The path from the computer screen to the 42-inch flat-screen is fraught with conflict for Joost. Cable networks, on whom the service will depend for content, may be loath to bite the cable-system operators that feed them. After all, why would cable operators tolerate a Web-based competitor that uses the very same high-speed lines they spent billions to route into homes?
For cable networks, that means navigating complex carriage agreements before they can provide programs to a service like Joost, said Will Richmond, president of research firm Broadband Directions.
Broadcast networks have more latitude to distribute shows online, but many are focused on their own Web ventures.
NBC Universal and News Corp. plan to launch their “New Site” online video service this summer via distribution deals with AOL, MSN, Yahoo, MySpace, Comcast.net and others.
NBC Universal is talking to Joost and other distributors, said J.B. Perrette, president of NBC Universal digital distribution. For a Joost deal to work, both parties would need to bend technologically. That’s because Joost is a service that runs as a desktop application, whereas New Site will stream video through its own player across those Web portals.
“Joost is different and has different challenges, and in our view there is no reason why we can’t work through these,” Mr. Perrette said.

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