Summary:

It looks like the death spiral that was the Bitbop mobile video service is finally no longer. PaidContent understands that the service — on…

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It looks like the death spiral that was the Bitbop mobile video service is finally no longer. PaidContent understands that the service — once built and owned by News Corporation (NSDQ: NWS) and sold, along with the rest of Fox Mobile, to IT services company Jesta when News Corp. couldn’t make a business out of it — is today laying off most of the staff that worked on Bitbop and shutting down the service.

According to a source, there are about 50 people getting laid off — people who worked on the Bitbop mobile video service. A small group will stay on to help with the final wind-down of operations, which should take about four weeks. The services that were live in the U.S. and Germany are getting shut down today, we have been told.

There were once big hopes for Bitbop, but things took a challenging turn as competition in the form of Hulu, Netflix (NSDQ: NFLX) and others invested heavily in their streaming services and delivering them to mobile devices.

However, this is not the end of Jesta Digital. The Jamba ringtones business — a German company that News Corp. once paid nearly $400 million to purchase in 2008 — is still a healthy cash generator, and it will continue to operate.

Bitbop is understood to have some 20,000 subscribers who pay $9.99 per month to receive premium mobile video services. But with the service never getting a coveted outlet via an iPad app, it’s had a hard time scaling up, and with many of its original content deals up for renewal at the moment, it looks like it became clear that Bitbop’s business model was no longer sustainable.

Earlier in January, we noted the problems at the company, including some executive departures. At the time, Jesta told paidContent in a statement that it would continue to develop new mobile products in the future, without specifying what they were.

We will update this story as we learn more.

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