By Scott Morrison
of DOW JONES NEWSWIRES
SAN FRANCISCO -(Dow Jones)- Joost N.V., the online video service launched by the founders of Skype Technologies, on Tuesday said it would reinvent itself as a technology provider that will enable media companies to publish Internet video under their own brands.
The move marks a dramatic retreat from the consumer market by New York City-based Joost, which was founded in 2006 but failed to live up to its early hype.
Internet users have instead flocked to Google Inc.'s (GOOG) YouTube for user-generated content or Hulu LLC, a joint venture between News Corp. (NWSA), NBC Universal (NBC) and Walt Disney Co. (DIS) dedicated to professional content.
"In these tough economic times, it's been increasingly challenging to operate as an independent, ad-supported online video platform," said Mike Volpi, who will step aside as Chief Executive as part of Joost's restructuring.
Volpi will be replaced as CEO by Matt Zelesko, senior vice president of engineering. Volpi, a key architect of networking giant Cisco Systems Inc.'s (CSCO) acquisition machine during the dotcom boom, will remain chairman of Joost's board.
Joost was founded by Niklas Zennstrom and Janus Friis, creators of Internet telephone service Skype, but the company got off to a rocky start largely because it required users to download software, while rivals such as YouTube and Hulu let people stream video directly from the Internet without hassling with downloads.
Volpi joined the company two years ago and his first order of business was to relaunch Joost as a streaming Web service, but that improvement wasn't enough to overcome the company's early missteps. Rumors earlier this year suggested Joost was shopping itself around to cable companies such as Time Warner Cable Inc. (TWC), a unit of Time Warner Inc. (TWX).
Joost said its portal would remain open, but the company would focus on providing cost-effective, end-to-end video technologies for media companies around the world that are embracing Internet-based video portals as a key path to distribute their premium content.
Volpi said the changes will result in layoffs but did not say how many people would be leaving the company. Joost had about 100 employees prior to the restructuring.
-By Scott Morrison, Dow Jones Newswires; 415-765-6118; scott.morrison@dowjones.com