What Does Joost's News Mean for Ooyala?

Written by Ryan Lawler

Wednesday, July 1. 2009 at 04:40 PM EDT 1 comment

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Yesterday Joost said it was shifting gears to sell its online video platform. But what does that mean for Ooyala Inc., for whom Joost was a customer, a partner, and now... a competitor? And what does it mean for former Joost chairman Mike Volpi, who still sits on Ooyala's advisory board?

Back in February, Ooyala announced that it had developed a co-branded version of its Backlot video management platform with Joost to enable some of the video site's content partners to upload videos to Joost.com. But now that Joost is de-emphasizing the online video site, where does that leave Ooyala?

For now -- and for the foreseeable future -- Joost will remain an Ooyala customer, according to CEO Bismarck Lepe. That's due in part to a "long-term agreement" that the companies signed when Joost decided to begin integrating Backlot with its system.

"We're still very excited to have Joost as a customer," Lepe says. "They signed a long-term agreement, and we're here to help them as they continue to evolve their business."

Around the time that the deal was done, Joost's then-CEO Mike Volpi joined Ooyala's board of advisors along with IBM Corp. (NYSE: IBM) veteran Steven Abraham. During yesterday's shake-up, Volpi relinquished his CEO role at Joost, but will remain as chairman of the company.

But now that Joost is positioning itself as an online video platform -- offering the same video management and distribution services as Ooyala, thePlatform Inc. , and others -- the question arises: Should Volpi remain on the board of two companies that are essentially competitors?

Some folks think he should step down from Ooyala's board. David Wadler, CEO of Twistage -- a company that, not coincidentally, also competes in the online video infrastructure segment -- even suggests that Volpi might have a fiduciary responsibility to do so.

"With the change in direction, there now seems to be a conflict at the board level. I don't know how someone who has a fiduciary responsibility to his company can sit on the board of advisors with a direct competitor," Wadler wrote in an email today.

Wadler notes that when Jeremy Allaire founded online video firm Brightcove Inc. , he stepped down from the board of competitor Maven Networks. [Ed. note: Maven has had its own share of problems lately.]

"I would expect Volpi to do the same," Wadler writes.

But Ooyala's Lepe says that's not likely -- at least not in the near future.

"Most of our board of advisory roles are between one- and two-year engagements," Lepe says. "For now we're happy with our working relationship with Mike as well as with his organization."

We'll have to see if that remains the case. A request for comment from Volpi himself -- sent through Joost spokesperson Kerry Vance -- has yet to be answered.