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 atCopyright 2006 Reuters Limited.
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