AOL Emerges As Video Search Giant

Time Warner Inc.'s AOL division said Monday it will enter the growing download-to-own video and search market later this week when it begins selling TV programs like "South Park," "Flip This House," and "Babylon 5."

The new service, AOL Video, 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.

The portal will feature shows licensed from Viacom Inc.'s MTV, Nickelodeon and Comedy Central, A&E Television Networks, and content from Warner Bros. Entertainment.

Similar to Apple Computer Inc.'s iTunes Music Store, most TV shows will sell for $1.99 each to start, but a handful, including episodes from Procter & Gamble Production's "Another World" and "The Edge of Night," are being made available as free ad-supported clips. Future plans could see AOL launch a rental and a download-to-own movie service later this year, too, according to Fred McIntyre, vice president of AOL Video. "Our focus is creating one destination where users can find all video available on the Web," he said. "This is why we've made some interesting moves in the market."

Technology from Truveo, the video search engine AOL purchased in December, and Singingfish, acquired in 2003, will power the site. Clips not hosted on the site will appear through AOL's video search tool. Those could include user-contributed videos from sites Google Inc., YouTube Inc. or MySpace Inc.

Jupiter Research senior analyst Joseph Laszlo says AOL is seeking a long-term strategy in video and search. "AOL will remain the most important dial-up ASP, though they are losing millions in a shrinking business," he said. "I think we'll start to see more services in video, music and instant messaging."

It's a stretch to think AOL could eventually dissolve its entire Internet service provider business, as the focus shifts more toward becoming an ad-supported content delivery portal, says Barrington Research Associates Inc. media and entertainment analyst James Goss.

"They've been easing away from the ISP role," Goss said. "It won't vanish overnight, but I suspect they will move more dramatically in this direction." AOL also plans to publish Open APIs by October that will let developers incorporate AOL's Video Search results into third-party sites. AOL, PC OEMs and broadband service providers are working to develop co-branded versions of the AOL Video portal.

The portal will integrate AOL's UnCut Video offering to let consumers upload and share videos directly from their camcorder, Webcam, video-enabled mobile phone and PC. In the coming weeks, Intel Corp. will put a version of AOL Video in consumers' living rooms via Intel Viiv technology-based PCs to make the content easily viewable on big-screen TVs and other devices.

AOL also plans to create a development community similar to eBay Inc., McIntyre confirmed. "We understand it takes commitment and investment, but certainly that's a big part of AOL in the future," he said. "We have some expertise doing that with the WinAmp media player."

Analysts say Web-pioneer AOL will try to take on Google Inc. and Yahoo! Inc. in the growing online video search market. Google, the world's largest search engine, bought 5 percent of AOL earlier this year for $1 billion.

The new portal has been in the works for more than a year. Time Warner and AOL plan to announce more details on Wednesday.