Joost Closes Substantial Series A Financing

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.

h-bd-aAfter 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

ABC, ESPN & Cox VOD Distribution Deal

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.

anytime tv graphicUnder 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.

Google Reader… on the Wii?

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.

Joost Broadcasting

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

Cable Channels Dump eBay

Auctions can be efficient, but they don’t work for everything.  Especially if the sellers see value for themselves in the inefficiency.    That was the message today delivered to eBay from a group of Cable TV networks. 

Discovery Channel, ESPN, LifetimeA&E and other national cable television channels announced that they would not participate in an eBay test product to sell advertising slots by auction. 

eBay apparently learned it was being dumped via a press release, the corporate equivalent of a “Dear John” text message.   Sean Cunningham, chief executive of the Cable TV Advertising Bureau (the trade group which was representing the networks), offered little sentimentality in his words.  He said “we were underwhelmed by what we saw on the system and underwhelmed by eBay’s knowledge of our business.”  He further added “We don’t believe that eBay is going to get this right.”

eBay had been working with a group of large advertisers since last year to build the advertising exchange.  Members of the group included HP, Home Depot, Philips Electronics and Toyota. They had pledged to spend $50m of their advertising budgets through the exchange over the next year.

The automated nature of the eBay exchange was criticized, in part, for removing some of the human element from the media buys. Mr. Cunningham said it "lacked the provisions necessary for capturing critical strategy and idea-driven intelligence during a buy." Click to Read More

“This Just In”: coming soon from HBO

Starting notably with Terry Semel leaving Warner Brother’s and taking on the role of CEO and Chairman of Yahoo in 2001, major web properties have increasingly embraced leadership from executives developed in the ranks of traditional media.  The similarities between the two industries, and the increasing need for their two worlds to work together, makes the logic understandable; even when critics question the less entrepreneurial nature of traditional media.   

In November, Time Warner’s AOL unit, hired Randy Falco as its CEO.  Prior to his hiring Falco spent 30 years at NBC, most recently as President of the Universal Television’s Network Group.   Given the television background, it was only a short matter of time before a TV meets Internet deal happened.  

Not long after Falco’s hiring, Time Warner siblings HBO and AOL shook hands across the family dinner table and announced a deal to partner on an Internet channel called “This Just In.”

The effort is particularly notable in that it marks HBO’s first effort to play online besides at its property. Click to Read More

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