Online video sites fizzle

Jul 30, 2009

Startups Joost and Veoh try to retool while network-backed Hulu cruises.

The Web video shakeout has begun. Hulu, a venture of NBC, ABC, and Fox, is growing nicely, aided in part by a slick marketing campaign using, of all things, television ads starring Alec Baldwin. But a slew of smaller sites are starting to reformulate their strategies in the hope of surviving.

Joost, which was started by the founders of Skype Technologies, recently announced it would reinvent itself as a wholesale technology provider for media companies to publish video. The New York City–based outfit was launched amid great expectations in 2006 with $45 million in funding.

Video-sharing site Veoh may also be in trouble. High-profile backers, including ex-Disney (dis) CEO Michael Eisner and Goldman Sachs (gs), have sunk $99 million into the New York–based site since its 2005 launch. In addition to the usual startups costs, Veoh has been hobbled by an expensive court battle with Vivendi's Universal Music Group over alleged copyright violations.

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