Joosting at Windmills ?

Joost has signalled that it needs to change its business model , as GigaOm notes:

In what is likely to be a major shift in the company’s strategy, peer-to-peer startup Joost is going to stop making its desktop client. The decision to suspend the client is likely to be announced soon, I am told. The company is going to a browser-only strategy, in which much of its content is going to be available through a browser-based player. Joost, I am told, will release a small plug-in that would embed itself in the browser and allow you to grab files using the P2P technologies. The web client is likely to have better quality than average video sites.

As we (and many others, I hasten to add) noted 6 months ago after we had completed an analysis of the Web TV market*, companies that had a business model that was using stuff you could get anywhere else, and had an irritating-to-user approach (DRM'd p2p video being a whole different ball of wax vs low budget p2p audio) risked being:

Low Value, Low Cost businesses - have Subsistence Economics - if they can get very compelling content (niche stuff, maybe porn) and keep operating costs low via viral marketing, low bandwidth streams, minimal chatter in the system, and attract sufficient low rent Ad revenue (I doubt much of this will be subscription) or have an offset model (the moolah is made elsewhere, maybe sell-through of DVDs etc) then it can work

So, they have now moved to a model which is browser based - risk is that it increases overall cost, so unless they can increase content value they are risking being:

Low Value, High Cost - the deadpool. In essence, if they cannot justify an incremental value on the service to attract more / higher value Ads or subscriptions over low cost operators, or the model has intrinsically higher infrastructure and / or customer capture costs, they will fail.

In other words they may as well be tilting (or Joosting) at Windmills unless other things change. Their issue at the end of the day is not really the technology, its the content. There's not a lot, its not great, you can get it elsewhere with less hassle and sans DRM.

So - how then to get content value up? Joost look like they are reaching for the Social Media panacea, but we think it may be too late now. Services like Twitter and Facebook have already sucked up a lot of the Chatterati who would be early adopters (its quite common to chat on Twitter about TV programs in the UK anyway), and iPlayer, Hulu and a string of "download on demand" services have grabbed the quality content high ground - and Amazon is in there now (we pretty much thought a year ago that Hulu signalled the end of Joost's existing business model). We suspect they are not going to get the good content at commercially reasonable prices now - the majors have placed their bets.

One option is enabling people to put content onto Joost that currently is not captured, and do a better quality job than YouTube - ie allow bigger screen video. The "pro-am" coverage by Tuttle Club members of the Greenbelt concert on Qik, or the work done for Seesmic being an example of what pro users could do. And why not buff up a bit of Chrome while they're at it.


The other option is to use the cash remaining to go to places where content values are still very low and use their powerful back end technology to enter them - mobile and gaming machines are examples.
Add value in that way, and then sell to someone who wants to enter is a viable option for a decent exit now, perhaps even a viable ongoing business.

*We will be producing a for-sale report in a month's time on the subject of the future of the Web TV market, based on the consulting work we've done over the last 3 years plus some up to date research.