Jalipo, the Internet TV service that charged on a minute by minute pay-as-you-go basis, has entered the deadpool. The browser-based offering, which delivered both on-demand and live streaming, was purchased by the ROK Entertainment Group earlier this year at a valuation of $16.8 million. But after just five months, its new owners appear to have had a change of heart. Blaming the current economic climate, ROK has decided to shut down the service and reportedly lay off its 30 London-based employees.
“We had high hopes for Jalipo when we acquired the business earlier this year, but it did not gain the traction we were expecting,” ROK marketing director Bruce Renny told Broadband TV News.
“Without significant and unplanned additional investment, we believe it would not grow significantly and, given the current economic climate, we have taken the decision to concentrate our resources and efforts on promoting our core revenue-generating mobile entertainment businesses whilst saving the costs associated with Jalipo.”
While the current economic downturn will likely make all companies re-evaluate their future spending plans, ROK’s decision to shutdown Jalipo probably has more to do with the service’s broken business model.
Rather than charging a subscription fee or employing an ad-supported model, Jalipo content was viewed in exchange for J:Credits, the company’s own online currency. Jalipo’s strategy hinged on the idea that micro-payments are the key to getting Internet users accustomed to paying for content, in an attempt to emulate the success of ring-tone sales or SMS text-messaging, for example.
However, as we noted when we first reviewed Jalipo, a minute-by-minute credit system isn’t the right way to sell online video.
If the content is worth watching, it’s probably worth watching till the end, and should be sold as a complete offering. Instead, Jalipo feels too much like making an over-seas phone call. You’re constantly thinking about the cost and wondering if you can justify staying online for much longer. Ad-supported platforms such as Joost and Babelgum, and paid-for downloads offered through iTunes and Unbox, makes a whole lot more sense.
Of little consolation to those who’ve purhased J:Credits but haven’t yet spent them, ROK put up a holding page on the Jalipo site explainng that they’ll be fully compatible with the yet-to-launch Rok Box Office. That holding page has now been replaced, with the company telling Broadband TV News that the planned new service will launch “as soon as economic conditions permit.” We won’t hold our breath then.