Does AOL Video Answer Speculation?
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The Time Warner internal debate over AOL's future has been all over the daily papers, but the news today is its new video service.
Called AOL Video, the beta service is meant to compete with popular crowd-sourcing video sites, such as YouTube, iFilm, Google Video and Yahoo Video.
The video portal will be available for download later this week and will include over 45 on-demand video channels with content from partners, such as A&E, MTV, Comedy Central, and Nickelodeon, according to a statement.
The videos will also include user-generated content, uploaded through AOL's UnCut Video.
Vice President of AOL Video Fred McIntyre told internetnews.com that the new service is a video portal onto the Internet.
"We want AOL Video to be the place where people start online when they want to find videos," he said.
So does everybody else.
In the past year, YouTube rose from a scrappy start-up featuring grungy user-generated content and banner ads to an industry leader and NBC partner that features grungy user-generated content.
After the week ending July 21, the site's monthly unique audience had grown 297 percent since January, according to Nielsen//NetRatings.
Big Internet players, such as MSN, Google and Yahoo, have their own video sites, each with a different take on what users want.
It's all a play for advertising dollars, a source of Internet revenue that increased 30 percent in 2005.
Sponsored search results drove that figure, but it's also a result of brand advertisers such as AOL partner Proctor & Gamble looking more and more to the Web to reach consumers.
The advertising boom paralleled another online explosion: the sudden ubiquity of user-generated video.
Consumers are as familiar with TV commercials as any kind of advertisement, so the pairing of online ads with on-demand video sites seemed a natural one.
But brand managers have so far been reluctant to put their products next to user-generated content.
After all, who knows what kind of wrong idea an unbridled teenager with a pack of Mentos and a soft drink will give the American consumer about your toothbrush product?
For brand managers, it's a scary thought.
But that's where partnerships with cable networks such as The History Channel come in, said McIntyre.
"At the top of the spectrum, we've got a lot of traditional, structure, produced programming. The same type of programming that brand managers buy day in and day out," he said.
McIntyre's hope is that the popular user-generated content will bring viewers to all the videos, including the perhaps more staid traditional content that brand advertisers will pay to put next to their product.
"That's the stuff where you get the greatest market demand. That's the stuff that brand marketers are interested in."
In March, AOL reported 18.6 million subscribers, a drop from 26.7 million in 2002.
But even those fewer subscriptions still accounted for $1.5 billion in first quarter revenues, while advertising earned only $392 million.
So can AOL succeed as an advertising business?
"Absolutely," McIntyre said, "I don't think that; I have absolute conviction about it."