Joost Unplugs Web TV Service, Concentrates on Selling Tech

Web video site Joost is restructuring, abandoning its hopes to be a successful ad-supported Web TV provider. Instead it will sell its video-serving technology to other media companies.

Joost, created by the same developers as Internet telephony application Skype, blamed an economy that has made it “increasingly challenging to operate as an independent, ad-supported online video platform,” CEO Mike Volpi wrote Tuesday on a company blog. “In order to position ourselves well for the future, we began investigating additional lines of revenue for Joost,” he said.

That investigation has led the company to shift its operations to providing white-label video platforms for companies interested in publishing Web video, including cable and satellite companies. Joost said it can help companies build video portals cheaper, as it is an expensive and difficult proposition.

Volpi implied impending layoffs: “Unfortunately, as a part of this change, we will say good-bye to many of our colleagues and friends.”

Joost representatives in London and Leiden, the Netherlands, could be reached for immediate comment.

As part of the changes, Matt Zelesko will take over from Volpi as CEO, while Volpi will remain chairman of Joost’s board. Zelesko was senior vice president of engineering. Joost said Stacey Seltzer, senior vice president of international business development and content acquisition, will run Joost’s business operations.

The company didn’t provide more details on its online video platform, but the changes move Joost from one highly competitive environment — Web TV — to another. Several other major companies specialize in different aspects of delivering online video, such as Brightcove, Adobe and Akamai.

Joost’s withdrawal narrows the field of major players in online video. Google’s YouTube continues to lead the pack, with its mix of consumer-generated video and sponsored content. For U.S. viewers, Hulu.com, backed by major TV studios, is also a strong player.

Joost did not feature user-generated content but instead had struck deals with content providers such as CBS and Viacom to deliver high-quality video through peer-to-peer technology. Last December Joost modified its site to deliver streaming video using Adobe Systems’ Flash technology, which didn’t require people to download Joost’s desktop application, which the company then shut down.

In May Joost had 643,365 unique visitors, a nearly 23 percent gain over April, according to Compete, a Web analytics firm that offers a free comparison tool on its Web site. But Joost lagged far behind its competitors. YouTube.com had 76.4 million unique visitors and Hulu.com had 8.2 million.