The partnership between the two divisions of Time Warner Inc. is another example of how the Internet is changing television by offering an additional distribution channel that's also tied to the growing online advertising market, which JupierResearch says is expected to double by 2010 to $18.9 billion from $9.3 billion last year.
"This service will bring an unprecedented collection of popular TV series to a totally new platform, revolutionizing the distribution of television programming," Eric Frankel, president of domestic cable distribution for Burbank, Calif.-based, Warner Bros., said in a joint statement with AOL.
In2TV will allow consumers to stream full-length episodes, and will also include interactive features, such as games, quizzes, polls and trivia contests. U.S. households switching to high-speed Internet connections from dial up are the driver behind the broadband network. More than half of households now use broadband, according to the Pew Internet and American Life Project.
In addition, a growing number of consumers are getting use to watching video on their computer screens. More than 94 million people, or 56 percent of the online U.S. population, have watched streaming video online, according to Web metrics firm ComScore Networks. Over the last three months ending in June, the average consumer watched 73 minutes of online video a month.
"(Online video) isn't really turning TV upside down," Gerry Kaufhold, analyst for market researcher In-Stat, said. "It's more like TV is starting to bleed onto the Internet, and what we're going to see in the next couple to three years is a lot more advertising-supported video being brought to the Internet."
AOL, based in Dulles, Va., said the upcoming television programming would be the "cornerstone" of its drive to offer broadband video as an attraction to its portal, which competes with Microsoft Corp.'s MSN and Yahoo Inc. AOL's other video services include search, video on demand and television, which currently features previews of TV shows, interviews with celebrities, listings and other information.
"With In2TV, we are enabling Web users to experience and interact with television programming in an entirely new way, and creating a new distribution platform for TV content," Kevin Conroy, executive vice president of AOL Media Networks, said.
The new network will be shown in a DVD-quality video format called AOL Hi-Q, which was also announced on Monday. The technology is expected to deliver high resolution, full-screen viewing, AOL said. The portal also plans to offer standard-quality streaming.
Despite the improvements in viewing, watching TV on a computer is not expected to match the quality of home entertainment systems. Therefore, video offered through portals is seen by Kaufhold as more of an introduction of programming that eventually could find its way onto cable or telephone companies' paid TV services.
"The big content owners are using free stuff on the Internet as a way to prime the pump, so they can get better payoffs when they move (the programming) onto a VOD (video on demand) service from cable or telcos," Kaufhold said.
In2TV will organize the shows into six genre-themed channels, including comedy, drama, animation, sci-fi and horror, adventure and vintage TV. The network is expected to include in its first year a total of 88 interactive features around specific shows.
In selling ads, AOL plans to offer in-stream advertising, as well as sponsorships and banner ads. Video ads, which would include 15-second and 30-second spots, are to be limited to a total of one to two minutes within each 30-minute episode, as compared to eight minutes on broadcast TV, AOL said.
At launch, the available shows will include:
Adventures of Brisco County Jr., Alice, Babylon 5, Beetlejuice, Chico and the Man, Dark Justice, Eight is Enough, F Troop, The F.B.I., Falcon Crest, Freakazoid, Freddy's Nightmares, The Fugitive, Growing Pains, Hangin' with Mr. Cooper, Head of the Class, Histeria!, Kung Fu, La Femme Nikita, Lois & Clark: The New Adventures of Superman, Maverick, The New Adventures of Batman, Perfect Strangers, Pinky and the Brain, Scarecrow and Mrs. King, Sisters, Spenser: For Hire, V, Welcome Back, Kotter, and Wonder Woman.
AOL expects to add more shows over time.