Joost to Reorg Biz Model; CEO Steps Down

Joost—the mega-hyped and mostly disappointing online video platform—has announced that it will undergo a major shift in its business model, away from focusing on its consumer-aimed video site toward becoming a back-end technology vendor for other media companies looking to distribute video on the Web. An undisclosed number of layoffs are expected.

As part of the company’s shakeup, former Cisco executive Mike Volpi, who has served as Joost CEO for nearly two years, is stepping down but will remain the company’s chairman of the board. Taking the reins as CEO is Matt Zelesko, who was most recently Joost’s senior vp of engineering. Also Stacey Seltzer, currently senior vp of Joost’s international business development and content acquisition, will take over the company’s business operations.
Joost executives have yet to say whether the company has signed deals with any media companies to utilize its video delivery technology and services. However, the plan going forward will be for Joost to act as a white label provider for a range of companies, including cable and satellite providers, broadcasters and video aggregators, said officials. Outgoing CEO Volpi insisted that the shift in focus had been necessitated by the recession.
“In these tough economic times, it’s been increasingly challenging to operate as an independent, ad-supported online video platform,” said Volpi in a statement. “In order to position ourselves well for the future, we began investigating additional lines of revenue for Joost…We have built a solid technology platform that there is demand for in the marketplace, and look forward to this new chapter for our company.”
However, online video remains a bright spot in the online advertising space, so it is tough to blame Joost’s struggles on the economic climate alone (Volpi insisted that is not going away). Simply put, the product has never lived up to the early promise of its hype-fueled launch two year ago; founders Janus Friis and Niklas Zennström of Skype fame severely miscalculated where the consumer market was headed in online video.

Though Joost launched with support from CBS and MTV Networks, along with 30-plus top flight advertisers such as Kraft, Lionsgate, Microsoft, Procter & Gamble and United Airlines; it has vaunted peer-to-peer technology and heavy software requirements, and became dated once Hulu launched just months later.

Even after a major overhaul last year, when Joost dumped its restrictive download requirements to become a browser-based video site like Hulu, it appeared to be too late. The site pulled in roughly 600,000 unique users last May, per Compete—versus 8.2 million for Hulu. Joost has also lost momentum on the content front, missing out on distribution deals with networks such as NBC and ABC, for example.