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The Times Online started a furor over online video broadcaster Joost this weekend with an article that stated the company would go through a “major retrenchment” and limit its business to the US market. The denials soon started to appear: A company rep told PaidContent that the statement was “completely untrue”, while GigaOm heard that the company had laid off some, but was hiring more engineers.

Joost has had an interesting, if not enviable, run since its much-hyped launch and $45 million fund-raise last year. The company, which wants to stream high-quality video over a distributed peer-to-peer network, hasn’t gotten much market share, even among tech geeks, and now vies with a multitude of other startups and a few 800-pound gorillas like Hulu, started through an NBC/News Corp. partnership.

While Joost originally touted its high-quality streams, quality was lower than expected, and it now appears that content distribution technology from quite a few other companies is just as good, if not better. Adding to its woes, Joost uses an application separate from the browser. The company says its browser-based viewer is coming, but that could be months away.

And the entrance of real broadcasters into the market has drastically changed the rules of the game. Unlike the music business, television companies have traditionally distributed their content themselves. When Joost launched, major broadcasters like CBS and NBC looked like they couldn’t figure out how to handle that distribution online. Now it looks like they not only can do it, but they can do it well.

The problem is, there are only likely to be a few big video portals, and it looks like Joost may be edged out of the market completely. The company needs to choose (if it hasn’t already) a new plan of attack, beyond just trying out new tricks like live broadcasting.

One possible avenue is hanging onto those foreign markets. As the GigaOm article stated, Joost is getting partnerships for content from outside the US. If it can set itself up as an international portal, it might well manage to capture a significant audience, even if it’s only a few percentage points of the population in any given country.

Alternately, Joost can keep hacking away at the US market, trying to convince companies like NBC to give out more of their content — although they’re certainly not in a good position to barter. Alternately, it could follow in the footsteps of Babelgum, another P2P video player, which appears to be hoping it can rework itself as a studio with plans to produce a new documentary. Weigh in yourself — there’s a poll below.

<a href=”http://answers.polldaddy.com/poll/500701/” >What should Joost do?</a> <br /> <span style=”font-size:9px;”> (<a href=”http://www.polldaddy.com”> surveys</a>)</span>

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