To the distribution people they expected to get content from, Joost was just another cable channel. The SVP of distribution in LA, London or Munich saw no reason why he should take a promise of $X from Joost when he could get $10x with an upfront minimum guarantee from someone else, be it NBC, Sky or Canal Plus. Especially when he'd committed to internal targets that depended on that 10x. What was his motivation to give Joost all the best stuff for free?

To the distribution people they expected to get content from, Joost was just another cable channel. The SVP of distribution in LA, London or Munich saw no reason why he should take a promise of $X from Joost when he could get $10x with an upfront minimum guarantee from someone else, be it NBC, Sky or Canal Plus. Especially when he'd committed to internal targets that depended on that 10x. What was his motivation to give Joost all the best stuff for free?

Did they spend too much money too quickly?

Did they invest too much in irrelevant tech?

Or more positively…

What went right?

Was customer acquisition [relatively] cheap?

Were they able to sell advertising?

How engaged were their users? Did the social TV features they rolled out work?

I don't think Zennstrom/Friis were involved in the day to day management – Joost was an investment for them.

Although they were undoubtedly advisors, I could certainly see them [they are after all only human] mis-applying previous lessons to a different market or identifying false-positive successes of Skype and applying them to Joost.. “the hardening of inapt strategies”.. Some of them could have been

- use p2p – more efficient, higher quality with scale

- get big quick – skypes network effects seeded and required this to be successful – they wouldn't have been successful without it

- go international straight away – good for phone calls, not for TV content – one market is hard enough

What strategies would have been better?

It's also hard to point to a single failure, and even in the context of the rest of the market we have to ask whether someone like Hulu is actually successful?

I'd contend that Hulu has deeper pockets which means they will stick around longer. Hulu has a huge benefit in the fact that it is owned by NBC, Fox and ABC (27% each – http://en.wikipedia.org/wiki/Hulu) – and Hulu isn't paying anything for this until April 2010 I believe – from that point on, the clock is ticking. The irony is that their international efforts have gone nowhere in 1.5 years, why not? could it be because the content owners want a big piece of the pie? a piece they can't give away..

Joost certainly had trouble acquiring content at the right price, so we should ask, can video entertainment exist online without the studios or distribution networks being intimately involved? Can new market entrants disrupt the status quo?

If you look at Joost, there was little disruption going on. They were simply an online-only TV service provider. The content was the same (30-60 mins). The advertising was the same (15-30 seconds). There was some innovation around interactive video, but this didn't seem to have an impact on viewers or the content providers.

The point is that Joost didn't really have a solid disruption strategy and failed to learn about the market they were in before they spent a huge amount of money on tech. Simply licensing and putting video online, delivering the same old stuff, with the same old advertising was short sighted.

Why?

Take a look at the existing industry – the best way to deliver the same old video, with the same old advertising is by owning the end to end chain where you own a) the distribution (tech), b) the channel (marketing) and c) the studio (content) – see Time Warner, News Corp (DirecTV, Foxtel, Sky), Comcast (even more so with the NBCU JV).

I'm not saying that there aren't huge opportunities to take advantage of the internet to revolutionise video entertainment – however taking the same old formats that were created for mass media broadcast networks 50 years ago and showing it on a different screen is not innovative..

Areas that are innovative that could bring value to creators, viewers and advertisers are;

- in a business that is studio driven – why not innovate new models of financing, owning and distributing video? give creators [the real talent] a reason not to produce or work for the studios in the first place. don't rely on stuff from the studios -> create an environment where better stuff is produced.

- brand advertising is the bedrock of TV revenue. why not deeply innovate around brand advertising experiences? innovate to deliver something much more valuable to viewers and thus to advertisers. do something you can't do on TV – have a conversation, engage in a meaningful way.

- over the years, many layers of “marketing” have been inserted between the viewers and the creators – there's no connection. why not give both sides the ability to interact with each other? create better content, evolve storylines in real time, involve fans.

One day I hope some of the senior management team will speak up with their lessons learned…

Let me throw out another experiment. Company A and company B both require licensed content. A fails and B succeeds. Here I'm thinking about Joost and Hulu. See Gizmodo's review of Joost, Hulu and Miro back in Nov 2007 http://bit.ly/57ByVc. According to Gizmodo:

“They're maddeningly incomplete, like a crappy library in a rural town. Joost is probably your best bet in terms of quantity and quality, with Miro working better if you want a ton of new programming but don't care about corporate quality.”

Why did A (Joost) fail and B (Hulu) succeed if both needed licensed content? I always thought it was the partnerships that Hulu had, first with NBC Universal, then Disney, and then Fox. Hulu gave up what it needed to get high quality content.

I enjoy reading your posts and one day would like to learn more about your doctoral work on backward causation. I'm a fan of Rubin's matching framework to tease out causal effects.

Could the bigger obstacle be that the founders were already rich from having disrupted a different space? It's pretty rare for a massive disruptive success to be followed by a similar success from the same founders. The problem is both the success, which can breed complacency, and the prior disruption experience, which can harden commitment to inapt strategies.

Joost was clumsy from day one, with inferior service, sparse content selection, technology hurdles, etc. We need to remember that at Joost's launch, YouTube was already serving up hundreds million videos streams a month. The video delivery technology war had already been won before Joost's hyped up unveiling.

All that said, are we about to see the next evolution of TV and computer convergence? FIOS has Facebook/Twitter and streaming from computer integration, Boxee is building HDMI hardware at $200 price point and releasing Beta, and quality televisions have become so dirt cheap that differentiation may happen only via built in WiFi connected media centers.

Interesting times lie ahead.

I was an early Skype adopter and remember telling everyone I knew how cool it was to make free phone calls. Also, the more people I told, the more I could call.

Joost did not have this kind of network effect.

Would it have turned out to be a good business? I don't know. As you suggest, even though exits are celebrated as successes, the standalone biz models in this area seem to remain fragile.

Today the startup that has the potential of realizing that vision is Boxee.

Different goals, different execution challenges, different strategies.

I understand the rationale, particularly at the time, for using p2p infrastructure vs. browser based server/client model, but even a simple download erected a major adoption barrier that disincentivized users from using the platform – particularly when presented with viable alternatives that did not require a download.

Modern web consumers have been habituated to be skeptical of downloads – viruses and what not have burnt us too many times. Of course, it is possible to overcome the natural hesitation (Skype is a great example of a service that was successful in this regard), but when confronted with two options that provide essentially the same service – one requiring a download and one not – consumers will almost always select the non-downloadable option.

Then again, with the proliferation of mobile app stores we will likely see consumer download skepticism dissipate. Apple is pushing this forward with their carefully guarded approval process. I hope the broader open source community can also successfully police more open app environments such as Andriod's.

Incidentally, while I'm pretty sure YouTube wouldn't have been viable as a
standalone business, it's a tremendous asset for Google, and almost
certainly profitable now.