Joost will compete with video services ranging from YouTube to Netflix's newly announced download service, and even with traditional cable companies like Time-Warner. The cable company has been experimenting with its own IPTV solution in San Diego and has rolled out a suite of interactive features and video on demand to cable subscribers around the country, says spokesperson Justin Venech.

Joost also faces a number of practical and technical challenges. "The popularization of P2P content sharing via Gnutella/Kazaa has already been extremely expensive for ISPs, and the advent of Joost can take bandwidth utilization ... to another level entirely," says Zhao. Still, he thinks that cable and broadband companies have a chance to profit off increased upstream traffic by forcing users to upgrade their services.

The service must also prove to content providers that Joost really is a "piracy-proof Internet platform," a claim made in one of the company's press releases. Unlike with typical peer-to-peer services, users will not be able to upload their own content to the network, but they will be helping transfer encrypted content that Joost supplies through the company's central servers. The concern is that some users might somehow be able to hack the Joost network and use it to send unapproved files, or somehow store approved content on their personal computer. With the Joost system, users can watch content on demand, but they aren't allowed to store it on their hard drives. Since Joost is currently free, there may be little interest in circumventing these measures.

For now, the future of Joost hinges on what kind of content it is able to license and support with its advertising-based model. So far, it has already teamed up with National Geographic, IndieFlix, Indy Racing League, Gamestar, North One, September Films, and Endemol. However, van Gulik says, "we're not trying to solve just the content problem. Or the advertising problem. Or the revenue problem. We're basically going for all of those things at the same time."