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It’s been an up and down week for the year old IPTV startup Joost but it’s ending on a high note; a very high note.

After several big announcements were made about content and advertising partnerships, the web was abuzz at the beginning of the month that the supposed broadcast-quality, free, peer-to-peer,  net-television service was officially going live (from beta).   Those announcements were slightly misleading (as access was dependent on invitation) but there was a spike in traffic, and interest.    Shortly thereafter, the Joost blog reported that the company’s central servers, which are located in Luxembourg, were having problems handling the demand and load. 

While Joost may be struggling to get it’s systems tuned to scale with demand, Joost released news that will likely leave the week, and the month, on a positive note no matter what happens next.  Earlier Thursday, the company announced the closing of a substantial Series A financing round.  In total, $45m was raised.

The venture round was led by Sequoia Capital and the European firm, Index Ventures (which also invested in the Joost founder’s prior company, Skype).

Though, as is the norm for private/venture transactions, little information was announced regarding valuation, it is clear  that the pre-money valuation accepted by the investors was substantial. The $45m dollar investment was characterized as buying a minority stake in the company which translates to a pre-money valuation of greater than $45m – though it’s not clear how much money was invested previously by the founders (who were flush with cash from the sale of Skype to eBay).  $45m pre-money is still  a staggering number for a year old company yet to have revenue or roll out its product in a wide release.   

Perspective on just how big a transaction this is comes with a comparison to investment in Joost’s competitor Veoh Networks.  In April 2006, Veoh a rival P2P IPTV company closed its Series B round. That transaction raised $12.5m from venture investors Shelter Capital and Spark Capital as well as Time Warner and other corporate partners. That round also resulted in two board seats going to industry heavyweights Michael Eisner (former CEO of Disney) and  Art Bilger (the former vice-chairman of Akamai and current managing partner at Shelter.).

The Joost deal is nearly 4 times the size of the Veoh investment – and it’s an A–round financing, not a Series B.   In what should be the understatement of the month,  Joost co-founder Janus Friis said “This funding represents a tremendous vote of confidence in Joost’s platform.”  Sequoia, which recently saw a tremendous return on its investment in YouTube, and hasn’t been scared to take large gambles in its transactions,  is clearly betting big on Joost.

In an indication that, like Skype, Joost’s has global plans from the start, Click to Read More

Video on Demand (VOD) got a boost yesterday when the nations 3rd largest cable operator, Cox Communications, and Disney’s two leading TV properties, ESPN and ABC, inked a distribution deal.

Under the terms of the agreement, viewers using Cox’ digital cable services, and equipped for VOD, wil get free on-demand access to first run TV series and programming including hits like Lost and Desperate Housewives (and sports content from ESPN).   Programs will premier on-demand 12 hrs after their regularly scheduled broadcast.

Advertising will be added to the programs for on-demand broadcasts.  At least one 15 second commercial slot per episode will be allocated for Cox to use in the promotion of their products and services.  Other ad slots will be allocated to Disney-ABC-ESPN  or their local affiliates for resale.  The ads will also test a geographic targeting system that delivers region, or even zip-code, specific advertising.

One of the key components of the deal is a promise by Cox to disallow fast-forwarding through commercials by means of integrated digital-cable features during the broadcast.  Cox can’t, or won’t, however, attempt to disable fast-forwarding features on the DVR’s (Digital Video Recorders) its customers lease from them.    As a result, should a customer record an on-demand broadcast for later viewing (or any kind of time-deferred viewing), there’d be no recourse to prevent ad-skipping.

With approximately 20% of Television owning households in the United States owning a DVR and able to record, or watch, programming at times that suit their schedules already, the impact of the partnership will likely be limited from the start.  Still, it’s a notable, even if only as a small adjunct distribution channel, to test market a new concept and experiment with means of mitigating the threat posed to the networks from changes to TV distribution technologies.  It’s also not a bad effort to capture more of the $3.9b market that is estimated to exist for VOD by 2010.

Everyday seems to have at least a few headlines about Google.  Much of yesterday’s Google-related news centered on the announced release of Google’s redesigned web analytics platform, Google Analytics.  The improved user-interface and tools made with the added assistance of the folks brought on in the acquisition of Measure Map will no doubt be a help to web marketers and web masters from beginner to pro. 

The torrent of news drowned out a small, whisper of information: Google has ported its RSS reader/Feed Aggregator, Google Reader, to work with the Nintendo Wii and the Opera browser embedded in it.  The Google engineers even went so far as to insure that it works with the buttons and interface of the Wii’s innovative controller.   News of the effort was mentioned on the Google Reader’s official blog

The original Google Reader is technically still a Google Labs development project and not a fully functional, supported service/feature.  The Wii, for all its strengths and popularity, is for now (for most users) a gaming device and not a home-media PC/Device or a platform for web surfing.   Combined, those facts mean the unannounced side-project to join the two is well below the radar – probably less notable than hackers modding Apple TV to run non supported video formats as reported in March.  Still, the effort at Google might prove meaningful, or at least a glimpse of the future.

For one thing, Nintendo has been active in adding functionality to the Wii beyond its highly demanded gaming abilities and user interface.  Back in January, Nintendo partnered with the Associated Press and other news agencies to provide news through the Wii’s integrated Opera web browser.  (See the Metue article here  for more info on that announcement).

It’s also no secret that Google, like many companies, sees’s a convergence of technologies leading to some form of set-top appliance integrating the Internet, the Entertainment Computer and our Television.  (Note: I use the term appliance and set-top very loosely, it’s far to soon to know whether streaming technologies, hardware, set-top boxes, gaming platforms, DVR’s or the other potential competitors will bring the best-in breed solution for making all this happen).

Google’s first major recognition of the value of gaming, and PC-TV convergence came a few months back when they followed Microsoft’s lead and bough an In-game advertising company.  In Google’s case – Adscape Media (see here for more information)

Google’s application of its RSS Reader/Personal news aggregator to the Wii may be nothing more than a group of engineer’s “amusement-project.”  There’s no reason to insinuate it’s part of a master plan being implemented at Google.  I’m not reading much into it.  I definitely wouldn’t speculate on an upcoming Nintendo and Google partnership, but the development is fascinating.

I’d love to check it out, if only the Wii wasn’t so hard to get.

Today was a relatively busy day for earnings announcements.  Networking giant Cisco announced their numbers after the markets close.  In addition, in the Entertainment Industry, both Disney and leading game publisher Electronic Arts announced their quarterly results.

Electronic Arts:
For EA, it was a rough day.  EA Reported revenue down 4% to 4613m.  Even excluding a one time accounting charge, net income was off a whopping 56% to $19m.  For EA’s full fiscal year, which ended March 31, revenue was slightly up to $3.1b (up 5% over last year). 

The drop was partly attributed to increased costs associated with R&D and marketing associated with the fall/winter release of next generation platforms (Wii, PS3), and the transition of titles which effected the entire industry.

In guidance for the next quarter EA also was cautious. EA forecast revenue for the quarter ending June 30 will fall the range of $300 million to $360 million. Analysts were expecting $460.6 million.  The downward adjustment was attributed, in part, to changes in accounting for the way the company books some gaming revenue.

More detailed press coverage on EA’s finances can be found at:

Yahoo Finance
Google Finance
Marketwatch

Disney:
Disney’s reported numbers that analysts were characterizing as decent to good but not impressive.  Revenue was in at $8.1b, up 1% over the same period last year.  Operating income was reported up to $1.8b from $1.4b.

For the quarter, the film studio revenue (which owns about 1/5 of Disney’s gross income) was down 13% relative to last year to $1.55b on the quarter. But lower costs and fewer high profile titles to market during the quarter helped increase operating income by 60% to $235m.  The coming months, with the high profile release of several major titles will be a big test for the quality of the Studio Division’s year. (Pirates of the Caribbean 3 has been a huge earner (info on the earning history of many of this summers sequals can be found here)) is in theaters May 25th, and Pixar’s Ratatouille, comes out June 29th.)

The TV division reported solid returns.  Cable channels (ESPN, Disney etc) saw a 19% increase in operating income to $963m.  ABC showed solid returns with increased ad-rates in prime time and positive notes on syndication sales of its hits Lost, Desperate Housewives and Grey’s Anatomy.

More detailed press coverage on Disney’s finances can be found at:

Yahoo Finance
Google Finance
Marketwatch

Spider-man 3, one of the most highly anticipated, and promoted, movies of the year opens in theaters today.   In a year of very-big-budget sequels,  Spidey may prove to be the costliest of them all.  Variety has reported production costs topped out around $260m before marketing and promotion.  Rumors have speculated that those numbers are sanitized and the actual cost broke the $300m barrier (making Spidey Part-3 the most expensive movie of all time – even with inflation adjustments).

Sony doesn’t have much reason to worry.  the first two movies took in more than $1.6b at the box office (see article from March for more info here).  That sum added to tremendous revenue from DVD sales, rentals and merchandising, not to mention gaming (Spider-man 3 games are due for several platforms) – Sony will probably see a solid return on investment, including marketing expenses, of even around $500m.

For Sony Pictures, Director Sam Raimi, Toby Maguire, Kirsten Dunst and the rest of the cast, this weekend will be a big indicator of how their work will be received.  While unlike its predecessor (Spider-man 2), this installment won’t show the skill of  a Pulitzer prize winning writer in its script, it does have the able assistance of a two-time academy award winning scriptwriter helping to guide it.  Ultimately, as Steven Spielberg is attributed to have said  “The important question is not whether a movie is worth $20m but whether it’s worth $10.”  I’d bet on a weekend gross between $75m and $110m. 

For the special effects team behind the movie-  the movie is already a hit based on the simple fact that it’s made it to the theaters.  One of the villains in the film, Sandman, relies tremendously on high level CG animation.  The character took a team of 30 f/x specialists two years to render and complete. Click to Read More

Last week IPTV company Joost announced it had signed up 32 companies including Coca-Cola, Nike, Purina, HP, Intel, Taco Bell, Lions Gate and others to advertise on their soon to be released service.  Today,  Joost announced its commercial launch.  

Though the service is proclaimed to be widely available, access is limited to people who receive an invitation from friends and affiliates (similar to what was done with Gmail, though Google called that offering a beta test).  That marketing tactic is a little risky.  On the one hand, it will allow the company some measure of controlled growth and  protect against initial traffic “bursts” that could theoretical impair their  offering.  The marketing gimcick may also create an artificial sense of exclusivity and community.  On the other hand, the tactic could alienate potential users and impair growth.

Joost, which was previously called The Venice Project (prior article can be found here), promises more than 150 channels of broadcast quality programming served on an IPTV peer to peer platform that is ad-supported.   Click to Read More

At the Tribeca Film Festival in New York, Sun Microsystems today unveiled a platform for offering digital video services through phone or cable lines.  The Service, called the Sun Streaming System was the brainchild and project of Sun co-founder Andy Bechtolsheim.   Bechtolsheim began its development at a startup he was running called Kealia which was bought by Sun in 2004.  Bechtolsheim stayed on at Sun (which he had left in 1995) to continue working on the project. 

One of the challenges the Sun System is intended to address is scalability and the economics of IPTV systems which are typically expensive. A big reason for that is that there is zero-tolerance for packet (data) loss with streaming. To avoid latency spikes and other issues, most delivery platforms rely on distributed small-scale servers and lots of disk-based storage. Sun’s Streaming Switch architecture (which is further described in a white paper found here) is designed to allow the use of more powerful, centralized servers.

Sun is marketing the system for 5 areas:

• Personalized Television Services over IP
• Targeted Advertising
• Time-shifted television (nPVR)
• Video On Demand
• Broadcast Television over IP

With heavy hopes and big dreams married to improvements in video streaming technologies and platforms, Sun is hoping (as are some potential telecom and cable companies, and IPTV startups) that the system will bring some much desired improvements.  If they do, it could even make Sun relevant again.