NEW YORK
The creators of Skype, the broadband phone service, are bringing a new way to distribute high-quality video content for P2P (peer-to-peer) users to market.
What was created as The Venice Project by Niklas Zennstršm and Janus Friis has reached the beta stage as Joost. It is slated to become available to consumers by mid-year and integrates existing "best-of-breed technology into one platform," according to CEO Fredrik de Wahl.
REPLICATING THE TV EXPERIENCE
What makes the new service go is Skype's global indexing software to facilitate P2P delivery, Mozilla framework for the clients, a CoreCodec and other technology used with the SVG (an open standards-based imaging format that complies with the World Wide Web Consortium) user interface in a secure, piracy-proof environment.
Incorporating existing technology "gives us a competitive advantage and makes getting to market faster and easier," de Wahl said.
But the user experience is not technology driven, according to de Wahl.
"Joost is about easy to use, replicating the TV experience and bringing it to the Internet," he said. "It has no Web browser or interface--users get content on a channel on a full TV screen. They can watch what they want, when they want it, from wherever they are."
Posting content is free on the service, compliant with the Digital Millennium Copyright Act, which signs legal agreements with owners before it appears on the site.
Revenue creation will be though advertising, with Joost earning its percentage depending on whether the service or the content owner sells it.
Anton Dennisov, an associate analyst in media and entertainment with The Yankee Group in Boston, focuses on the broadband video sector. "This is the way to look at the media content that exists right now," he said. "Many people want a very small portion of content--about 30 seconds to a couple of minutes--like YouTube and about 200 similar sites."
Then come the viewers who favor more polished video production and longer-form projects of 20 minutes or more.
"Companies like Joost, Veoh and BitTorrent target this sector," Dennisov said, and deliver a TV-like experience to the PC screen.
Another key to the Joost business model is copyright protection for the content creators, said Maribel Lopez of Forester Research, also of Boston.
"If a user wants a really popular movie, like 'Casino Royale'--and many other people want it, too--the Joost model works," said Lopez, adding, "but it does not work with a less popular movie."
BANDWITH AND A SERVER
But back on the upside, broadband TV also "offers mobility [with a laptop and a WiFi connection] and the consumers the option to time-shift, with content available on demand," Dennisov said, adding that it also facilitates niche content.
"A problem with networks is that it costs a lot of money to get shows on the air due to limited funding," he said. "But that is low-cost with Joost," as it requires only bandwidth and a server.
The service is not "in the traditional video value chain," and Dennisov said "that's the beauty of it. There is no longer any higher power (such as a network, program director or critic) to keep content off the air."
He added that garnering content from established content owners "is an interesting concept at the right time, because broadband penetration is about 53 percent now. Our research indicates that it will reach 74 percent by 2010."
But such companies also face several predicaments. "None are making any money right now, since they have a chicken and egg problem," Dennisov said. "They have to monetize through advertising and they need eyeballs to do that," noting that the average viewer watches 4.5 hours of TV per day, but only 1.25 hours of streamed content per month (with the average clip five minutes in length).
In addition, garnering venture capital can be a challenge. "But that scenario is improving," he said, "because the average person watched 15 streams per month in 2005. Today, the figure has risen to 67 per month [per viewer]."
While Joost has the funding to operate for some time (after Skype sold for $2.6 billion), "this is about finding a way to make money," Dennisov said. He also wonders what the response of established corporations like Verizon and Comcast, which target such alternate revenue streams, will be. "The market is about ready for the technology, but it's still going to be an uphill battle."
Lopez pointed out that services such as Joost provide a next generation platform that will transition what "has been seen on the 'net to a 52-inch living room screen," she said. "This is about turning 'net TV into high quality TV."
There are three reasons that the right time for that to happen now, de Wahl said. "The technology is in place; the infrastructure of the 'net, which we see coming together right now; and most importantly, more content [is] moving online."
(For more on Joost, read "Will Venice P2P Streaming Site Surge in 2007?" in Will Workman's latest "Inside Broadband" column, p. 42.)
