Web Video Draws In A Crowd

Web Video Draws In A Crowd

Brian Deagon 6.20.2007

Mike Volpi says he's seen the future of TV, and the future is Joost.

"We will transform the way people get entertained," said Volpi, Joost's chief executive, speaking to an audience of about 350 people attending a company party Tuesday night in Los Angeles for advertisers and video providers.

Volpi joined Joost two weeks ago, leaving behind an influential 13-year executive career at Cisco Systems.

Joost is a Web-based TV service from the creators of Internet phone service Skype and file sharing service Kazaa. It launched in April to a limited test audience.

Since then, 700,000 copies of Joost's software — needed to navigate the service and stream video — have been downloaded, a spokeswoman said.

The service represents an emerging class of Internet video services, which deliver all manner of programming to the PC, including half-hour sitcoms and one-hour dramas.

The boom erupted with YouTube and has since been joined by the top Internet portal firms, TV networks and Hollywood studios.

"We have the opportunity, through the Joost platform, to combine that media fare with interactivity and all aspects of the Internet," Volpi said. "Our number one task right now is to create this market."

Competitors have similar plans, including San Diego startup Veoh. The company has begun early tests of VeohTV, a service some have dubbed a "Joost killer."

"I think Joost's approach is misguided," said Dennis Miller, a general partner in Spark Capital, one of Veoh's investors. "Joost has a closed system that doesn't blend the best of what's on the Internet with the best of TV."

Joost is a "closed" system in the sense that viewers can watch only shows from producers they have struck deals with, much like cable TV networks.

Joost promises more than 150 Web "channels" of TV fare from a stable of content partners that include Viacom, CBS, Warner Bros., CNN and Time Warner.

Veoh, by contrast, is wide open. In addition to about 20,000 videos posted on the site — much of it submitted by users — VeohTV will carry any video available on the Web.

A Veoh search for the word "dogs" brings up links to 424 videos of the furry creatures. Veoh also lets users download content onto their hard drive for later viewing.

Veoh investors include former Disney (NYSE:DIS – News) exec Michael Eisner, Time Warner (NYSE:TWX – News) and Goldman Sachs (NYSE:GS – News). According to reports, Veoh has received more than $16 million in venture capital funding.

Joost recently received $45 million in venture funding, coming from CBS, Viacom (NYSE:VIA-B – News), Sequoia Capital and others.

Other competitors in the video-sharing Web site field include Metacafe.com, Break.com, Sony's (NYSE:SNE – News) Grouper.com, Blinkx.com, Jalipo.com and Babelgum.com.

A growing number of rogue Web sites also dish up hundreds of movies and TV shows without copyright approval.

"The competition is intense," said James McQuivey, an analyst at Forrester Research.

Another big player entering the market is a joint venture of NBC Universal and News Corp.'s (NYSE:NWS – News) Fox TV, an as-yet-unnamed Web site that will launch later this year. Content partners include Time Warner's AOL, Microsoft's (NasdaqGS:MSFT – News) MSN, Yahoo (NasdaqGS:YHOO – News) and MySpace.

Ultimately, consumers will separate the winners from losers in the market, analysts say.

"CBS.com doesn't really mean anything to a Web surfer," Miller said. "They want content when they want it and where they want it."

The winners will be services that provide the greatest freedom of choice and tech features — enabling users to view, rework and recommend content like they do on social networking Web sites.

For now, all of these sites are works in progress.

Long term, getting digital content onto viewers' TV set is the Holy Grail of Web video, analysts say.

Joost is exploring partnerships to embed its software into set-top boxes for easy viewing on TVs.

"At some point we'll have that type of device — not from us but from our partners," Volpi said. While the Apple (NasdaqGS:AAPL – News) TV set-top box does let users fetch video from Google's (NasdaqGS:GOOG – News) YouTube video-sharing site, high-definition content is limited to what Apple makes available on iTunes. Xbox users who rent movies or buy TV shows from Microsoft's Xbox Live Marketplace face similar limitations.

Miller believes there's an institutional industry interest in keeping it this way. Closed systems make it easy to deliver programming with hard-to-skip advertising and anti-copying technology.

Analysts expect a more open PC-to-TV device to emerge eventually.

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