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1/26/2010
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AOL Buys Online Video Firm

The $36.5 million acquisition of StudioNow will allow AOL to distribute professionally created video through its Seed.com site.

AOL has acquired StudioNow, a company that provides an online platform for creating, storing, and distributing video, for $36.5 million in cash and stock.

AOL on Monday said it planned to fold StudioNow technology into Seed.com, expanding the Web site's current offerings of professionally created writing and pictures. Privately held StudioNow will also continue offering its online platform to commercial companies. Its current customers include Simon & Schuster, Maxim magazine, and CitySearch.com.

"Premium original video creation is a fundamental part of AOL's strategy to offer consumers world-class, stimulating content at scale, and the integration of StudioNow into Seed.com will enable us to increase our video content/offerings significantly," Tim Armstrong, AOL chief executive and chairman, said in a statement.

The acquisition, completed Jan. 22, is part of AOL's strategy of distributing on its 80 branded and niche content sites writing, pictures, and video from professionals. AOL, which was recently spun off by Time Warner, believes that professionally created video can attract as many viewers and advertisers than licensed programming from TV and Hollywood studios. Yahoo and IAC/InteractiveCorp are following similar strategies.

Online video advertising in the U.S. is expected to increase to $5.2 billion by 2014 from $734 million in 2008, according to eMarketer.

Meanwhile, AOL also announced Monday the resignation of chief technology officer Ted Cahall. The company is searching for a replacement.

AOL also said that it has hired Jeff Reynar as head of technology for engineering and products in New York. Reynar is the co-founder of DBT Labs, which provides a social search service. He was also CTO of DBT.

Before co-founding DBT, Reynar spent four and a half years at Google as a product manager and as an engineering manager.

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