San Francisco has become a crucible for the nascent live streaming-video business, with two of the largest companies in the burgeoning sector now located there.

Ustream, which has raised about $86 million, moved to the city from Mountain View, California.

Close by is Justin.tv. The smaller, less well-funded operation is heavily trafficked. Company officials claim to be uploading more hours of live video per day from users than YouTube.

The commercial potential for such live broadcasts—which range from views out of someone’s window to concerts by rock stars—remains to be seen.

Officials at both Ustream and Justin.tv, however, say that advances in smartphone technology and the mobile Web, as well as increased access to broadband, sets the stage for the potential widespread adoption of live video broadcasting.

“We are focused on enabling everyone in the world to broadcast live over the Internet, and anyone to be able to watch that over the Internet,” said Ustream CEO John Ham. He co-founded his company in 2006 with the idea of helping soldiers overseas communicate with more than one person at a time back home. “Ustream is the future of live media.”

The Japanese telecommunications conglomerate SoftBank Corp. apparently agrees.

In February, SoftBank committed to investing $75 million into Ustream by July 2011, when SoftBank will become Ustream’s largest shareholder. On May 18, the two companies announced a joint venture, Ustream Asia.

“The number of Internet users in Asian countries is growing dramatically, and Ustream Asia will be a live video distribution platform for this huge market,” said Masayoshi Son, chairman and CEO of SoftBank in a statement. “In Japan, the number of Ustream users is growing rapidly, so I am excited for this business opportunity in Asian countries including Japan.”

Revenue for streaming video could come from pay-per-view for high-profile events, from advertising, or from companies paying to broadcast internal events.

Ustream would not release financial data, but it only recently started trying to generate revenue aggressively, and it continues to spend for growth, Ham said.

The commercial potential of streaming video remains unclear, as does its viewership.

Ustream and SoftBank both claim Ustream’s worldwide viewership is exploding, with internal company measurements showing a rise from 50 million unique live streams in December to 100 million in April. Ustream says Quantcast counted 44.5 million people watching Ustream in the last 30 days, 13.4 million of them in the United States, although it would not provide access to its Quantcast account.