Does The Internet Have Enough Juice For Joost?
Joost, the new peer to peer (P2P) television company has just completed a $45M round of financing, led by Index Ventures and Sequoia Capital. It’s a big round of financing, given that it’s so early on in the company’s life. Clearly, they want to get big, fast. It’s not surprising they got this done - it was almost certain to be a hot deal with VCs, given it’s founded by the guys that founded Skype. Index was one of the lead investors in Skype, so they’ve worked with Janus Friis and Niklas Zennström before. Sequoia is a new investor.
The techology behind Joost is quite straightforward (if I understand it correctly): actual video distribution is done via P2P, with program guides and the like provided via central servers. There can be no doubt it will work in principle - that is, I expect Joost’s software to be technically well-written; and I expect the management team and board to have the credibility to get big deals done with major networks.
However, it seems to me that there are at least a couple of significant risks for Joost:
1. Is there an unmet need? When in their homes, where they can access broadband, do people really want to watch television on their computers? I don’t mean the kind of short clips that people watch on YouTube. Rather, I mean watch full-length TV shows or movies. I know that I’m not interested in doing that; I have no idea how many people are.
2. Does the Internet have enough juice? Does the Internet - particularly people’s home broadband connections - have enough bandwidth for a service like Joost to work, if it becomes popular? Let’s say there’s a huge demand for Joost. Well, home broadband works, and is economic, only because people share available bandwidth. The minute people start using their connections like leased line connections (as you do if you watch a high-quality streaming video), there actually isn’t enough bandwidth to go round; and everyone’s connections slow to a crawl. And if connections slow to a crawl, P2P content delivery fails. In fact, this class of problem is so severe that many ISPs actually apply traffic shaping (aka throttling) to this kind of activity, because the network simply can’t support it.
Joost is a high-quality operation:Â I’ll be watching it with interest to see if there’s a big demand for this kind of service; and, if there is, whether the Internet can cope…
Asam Bashir wrote:
Not only that, but many ISPs are restricting what you can do on broadband, Orange and Vodafone for example prohibit p2p on their 3G data network, and Virgin media have introduced nationwide bandwidth throttling during prime-time. Even if the technology works, and there are some customers who would want to watch TV on computers, it’s the networks that will prevent this happening on a large scale, as in the UK at least, the major players have their own branded TV and content they’d like you to watch.
Posted 11 May 2007 at 4:20 pm ¶
Anil Gupte wrote:
There is an unmet need for programs that are not available on mainstream Cable TV. For example foreign language movies, indies, amateur and lots of other good stuff.
As far as having enough juice, you are right, the answer is no. But that is just the start of Joost’s problems. See http://l3media.blogspot.com/2007/05/7-reasons-why-joost-could-fail.html
for more
Posted 11 May 2007 at 6:15 pm ¶