Joost, the online video service that has largely failed to live up to the considerable expectations of a project from the founders of Skype and Kazaa, is reportedly up for sale. It is suggested that Time Warner Cable could be interested in picking up the pieces, although the fit remains a puzzle.

Naturally, Joost is denying the rumours, first reported by CNET, now owned by CBS, an investor in the business. CBS has since focussed its attention on builing as a competitor to the Hulu joint venture between NBCUniversal and News Corporation.

In the face of increasing competition from established broadcast brands, the future for Joost looks bleak. Without significant technological differentiation, it is dependent on aggregating a library of programming, most of which is non-exclusive, to maintain an audience.

“We’re not close to being done yet,” said chief executive Mike Volpi, adding that nothing “will keep us from continuing on our mission to bring video to you over the internet.”

Six months after abandoning its peer network approach in favour of simply streaming to a broswer-based Flash player, Joost reported a five-fold increase in traffic. In March its users watched more than 15 million videos, amounting to a million hours.

That may sound impressive, but compared to competitors, or the cable television that Joost aimed to displace, it is hardly going to excite advertisers. In fact, it only serves to show how bad things were when Mike Volpi joined Joost from Cisco.

Joost is continuing to develop its service, launching an iPhone application that has had 1.5 million downloads, adding more programming, increasing its syndication options, and planning to offer streams in three qualities.

Any acquisition of Joost could be a face-saving exercise for those involved, as any valuation of the company likely to be strategic rather than financially significant.