Livestreamer is a downloader. It needn't pass to vlc or do any transcoding. On the command line, execute;
Code:
livestreamer -o "3696988.flv" "https://www.ustream.tv/embed/3696988" best
which will download the 720p quality of the video off the server and write it to a file named "3696988.flv". Leave off "best" for a listing of the other qualities available (on the server) for the video.