Joost, an early pioneer in bringing popular TV shows and movies to the Web, is dropping its consumer service, cutting jobs and losing its high-profile chief executive as it struggles to find revenue to survive.
The company said on Tuesday it is changing strategy to serve as a white label video platform for media companies such as cable and satellite providers, as well as broadcasters. This moves it away from being primarily a consumer website.
In these tough economic times, it's been increasingly challenging to operate as an independent, ad-supported online video platform, said outgoing Chief Executive Mike Volpi, who will remain involved with Joost as chairman.
The company has programing deals with CBS Corp, Viacom Inc and Warner Bros among others.
Joost launched with much fanfare in 2007 as the latest venture of Skype founders Janus Friis and Niklas Zennstrom. Before Skype, the Swedish entrepreneurs founded KaZaa, a file- sharing service popular with music and entertainment fans for sharing songs and video clips. Volpi, a former rising star within Cisco Systems Inc joined Joost soon after.
But rather than become the leading website for TV shows and movies, Joost lost out to Hulu.com, a joint venture of News Corp, NBC Universal and Walt Disney Co, which launched around the same time.
Hulu's viewership has grown rapidly in the last year and is now the second most-watched video site in the United States after Google Inc's YouTube. Unlike Joost and YouTube, Hulu has received broad support from advertisers, many of whom have cross-platform ad deals with the broadcast parents.
Volpi said in a statement the company believes the Joost technology platform will be in demand. Cable operators and content producers are working on plans to put more shows on the Web and are trying to develop online systems that can ensure they get paid for the programing and help prevent piracy.
Last week, Comcast Corp and Time Warner Inc said they would start a trial of cable TV shows on the Web for paying cable subscribers.
There had been speculation earlier this year that Joost would sell itself to a cable operator such as Time Warner Cable Inc, but nothing have come of the talks so far.
With the change of strategy, Volpi said the company will be losing staff. A Joost spokeswoman declined to elaborate on how many jobs would be cut. Joost employs 100 people across three offices in New York, London and the Netherlands.
Matt Zelesko, currently senior vice president of engineering at Joost, will take over as CEO, while Stacey Seltzer, currently SVP of international business development will run the business operations.
(Reporting by Yinka Adegoke; editing by Andre Grenon)