Joost Deserts, and w(h)ither Web Video - a Seesmic shift?

W(h)ither Joost...the high profile resignation/sacking/whatever of their CTO is the tip of a "rats leaving the ship" rumourmill thats been going for a few months now, and now some are questioning whether its being sucked into the deadpool (we have no clue of the reliability of said rumours), whereas other are throwing out lifelines

And yet, and yet.....2008 is supposed to be the Year of Video, Seesmic has been launched amidst similar raptures that Joost was (about a year ago...), and others have rolled out in Qik succession. Some, like Wallstrip, have even been sold. So who is wrong, who is right?

Well, here is a bit of high level analysis, this is what we think is happening as the new video services all march in 2x2.



It's slightly tongue in cheek, but there is some method behind the mirth. Defining the 4 areas:

Low Production Values
At its lowest level its stream-of-consciousness waffle, badly recorded on low budget devices with no postproduction editing. Yes, I'm talking about some of the "videoblogging" we see. The other "low production value" angle is content with zero differentiation, ie stuff you can see in a hundred other placesIn essence the effort to produce is extremely low. Problem is, the effort to receive cr*p is actually quite high. We know that if people find the content compelling, they will put up with poor production values...but the content has to be sufficiently compelling to a large enough user base.

High Production Values
At its best its thoughtful scripting, original content, high quality capture and editing, high resolution, widescreen - you can play it on your TV comfortably. the sort of approach i-Ball has used, for example.

Low Cost of Operation
Lowest cost option is automated capture and editing of user generated content, hosted at the lowest possible service levels and at such a low resolution that you can stream it over baseband easily. Oh, and low volumes to minimise traffic costs.

High Cost of Operation
Carefully (ie costly) management of ingestion and editing, a set top box subsidy, high transport costs from big volumes and large bandwidth files, big marketing /PR expenses, sales machines etc etc all contribute to high operating costs.

So, putting these together into the 2x2 allows us to conclude that:

High Value, Low Cost businesses will make out like bandits.. Cost reduction is possible via the "free ride" over the web (ie no STB subsidy), few-to-many downloading rather than video conversations (get the users to pay for bandwidth as much as possible)

High Value, High Cost businesses are "in interesting times" as they will most likely have a high burn rate from Day 1, whereas the revenue will come later. You need deep pockets and strong stomachs - or a strategic rationale - to take this path. Their main challenge is to justify why their STB subs / Ad CPM are higher than similar quality, lower cost plays.

Low Value, Low Cost businesses have Subsistence Economics - if they can get very compelling content (niche stuff, maybe porn) and keep operating costs low via viral marketing, low bandwidth streams, minimal chatter in the system, and attract sufficient low rent Ad revenue (I doubt much of this will be subscription) or have an offset model (the moolah is made elsewhere, maybe sell-through of DVDs etc) then it can work

Low Value, High Cost - the deadpool. In essence, if they cannot justify an incremental value on the service to attract more / higher value Ads or subscriptions over low cost operators, or the model has intrinsically higher infrastructure and / or customer capture costs, they will fail.

So, where are Joost, Babelgum, Seesmic, Qik, Wallstrip, iBall, YouTube, the various IPTV plays etc on this. We leave it to you to place them relative to each other on the matrix, (or pay us some money to do it for you, or buy the report* when its out - but here are a few calibration points:

(i) You can get a lot of TV repeats for near-free
(ii) You can get a lot of UGC for free, and some of it is quite high quality
(iii) In general, any service where the producer lowers their costs by forcing the consumer to raise theirs is at a strategic disadvantage. Piracy is a real world model.

It's also worth noting that as well as competing with each other, these services are competing with text, image and audio based media which do have lower infrastructure costs, so it is worth thinking through whether they do a better job vs the nearest alternative "lower bandwidth" competitors - which incidentally tend to have more people attached to them. (Seesmic v Twitter, Joost v BBC, Wallstrip v CNN etc)

*erm...we haven't finished it yet. End Feb - promise.