Kenneth Li
AOL plans to announce on Monday it will test launch a new Internet
video service in an attempt to demonstrate how much it has learned
from mistakes that cost the once reigning king of the online world its
leading position.
The new service, AOL Video, aims to be the one-stop shop for online
videos and will let users search for videos across the Web, upload
their own, or buy or watch for free thousands of TV shows from any one
of 45 video-on-demand channels on nearly any device.
Users will also be able to subscribe and rent videos later this year,
executives said.
These channels will include shows licensed from Viacom Inc.'s MTV,
Nickelodeon and Comedy Central networks, A&E Television Networks, and
corporate sibling Warner Bros.
The launch comes at a critical moment at the online division of Time
Warner Inc. and precedes a presentation by AOL on Wednesday, when it
will lay out a new strategic plan widely believed to involve giving
away its e-mail and Web services away for free to boost online
advertising sales.
Getting AOL right could significantly boost the share price of the
world's largest media company, which touched a two-year low in July
and trades at a relative discount to its big media peers, investors
have said.
Experts said AOL's service could face a tough time as it has lost its
cachet among young male audience, considered the most voracious
consumers of online videos, according to Jupiter Research analyst
Joseph Laszlo.
But AOL sees the growing popularity of viewing TV shows -- not just
among young guys but across other age and gender categories -- as
ample opportunity. "What we've really seen in the market for online
video consumption ... (is that) it is moving quickly from early
adopter to early majority," Kevin Conroy, executive vice president of
AOL, said in an interview last week.
"We're in a really good place to help fuel this and bring this
together, Conroy said.
AOL's new video portal plays a significant role in the company's
transformation from a business that relied on subscriptions for 80
percent of its sales to one driven primarily by online advertising
sales, executives said.
Once synonymous with getting online, AOL has been left in the dust in
recent years by faster moving rivals Google Inc. and Yahoo Inc.
(Nasdaq:YHOO - news), whose growth have been driven by ad sales from
text search engines, which AOL does not own.
Three years ago it began planting a stake in video search with the
purchase of video search engine Singingfish, and AOL announced the
purchase of Truveo in January. Unlike text search, with video AOL
opted to own, not lease, the business.
Still, the lion's share of Web video watchers have flocked to young
start-up YouTube.com, which claimed a 31.2 percent market share in the
week ending July 22, according to HitWise. News Corp.'s MySpace.com
came in second with 17.61 percent share, while AOL Video was ranked
ninth with less than 3 percent.
AOL WEB 2.0
Technology industry analysts were impressed with AOL's video plans and
said it reflected a big change in how it viewed its place on the
Internet.
While not earth-shattering, "Overall, AOL's service is very
comprehensive," said Brian Haven, a senior analyst at Forrester
Research.
"They're starting to really sink their teeth into Web 2.0
technologies," added Haven, referring to the second generation of Web
technologies that let people collaborate and share information online.
What impressed some reviewers was that AOL's video search let users
find what they wanted even if it meant sending viewers outside of AOL
to watch it. "It is a change ... to let people go and visit other
places," Jupiter's Laszlo said.
AOL also plans to let other Web sites incorporate its search
technologies directly onto their own sites, which text search engine
companies like Google have allowed for quite some time.
An area on AOL called UnCut video will let users upload, share and
talk about their own videos, like YouTube. Users can send videos in by
cellphone, handheld device or computer, Conroy said.
Viewers will also soon be able to watch some of the videos on handheld
devices and cellphones that support Microsoft Corp.'s copy protection
system.
"If it's out there, you'll find it here," Conroy said.
AOL Video can be found at http://www.aolvideo.com
Copyright 2006 Reuters Limited.
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Kenneth Li (reuter@telecom-digest.org)