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AOL to Boost Video Offering

August 01, 2006|From Bloomberg News

AOL, the online service of Time Warner Inc., is remaking its website to add more than 45 video channels and an improved search engine to attract more broadband users.

Tests of the new video-on-demand channels and search service will begin Friday, said Josh Freeman, vice president of AOL video services at the Dulles, Va.-based company. The services will be offered to all users Aug. 22, he said.

The site will let users watch music videos and movie trailers from sources such as Warner Bros. and Viacom Inc.'s MTV. Time Warner will unveil a plan Wednesday to offer AOL for free to users with broadband access, a person who saw the plan said last week. The step is part of a restructuring for AOL, which has lost more than 8 million U.S. subscribers since 2002.

"AOL's intention to be a portal to online video is an interesting move," said analyst Joe Laszlo of New York-based Jupiter Communications Inc. "There's no doubt it's going to be a bit of a bigger piece of an overall broadband strategy."

The video-on-demand online channels will offer TV programs such as "SpongeBob SquarePants" from Viacom's Nickelodeon and "Laguna Beach," MTV's teenage reality show, for $1.99 a show. Eventually, movie downloads may be added, AOL's Freeman said.

AOL is betting its video offerings will persuade users to keep visiting the site. AOL also will make money from selling ads to be shown as users watch trailers and home-made videos for free. AOL in January acquired Truveo Inc., a video search technology company.

Shares of New York-based Time Warner, the world's largest media company and the owner of Warner Bros., rose 17 cents to $16.50. They have declined 5.4% this year.

AOL, a Web pioneer two decades ago, is trying to take on Google Inc. and Yahoo Inc. in the nascent online video search market. Google, the world's largest search engine, bought 5% of AOL this year for $1 billion.

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