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June 22, 2005

AOL Tests New Entertainment Portal



Courtesy of InternetWeek

America Online Inc. has launched in beta a new entertainment portal that will try to beat competitors Yahoo Inc. and Microsoft Corp.'s MSN with more original content, particularly in video.

Unlike its subscription service, the free AOL portal, launched Tuesday, targets broadband households, a growing market worldwide, with the United States being the largest.

To attract high-speed-connected consumers, AOL plans to focus on video content, which will be supported by a separate search engine, a new video player and a "video hub" that will serve as a central location for music, news, sports and entertainment. Most of these features are scheduled to be added in the "coming weeks," the company said.

"Video is the lead play for us in terms of how we will draw new visitors to the portal," David Liu, general manager of AOL.com, said.

To keep consumers up-to-date on the content their most interested in, AOL plans to provide an RSS feed. RSS, or really simple syndication, is a self-publishing specification that enables publishers to distribute text, audio and video to web content aggregators, called readers.

As part of its strategy for attracting advertising dollars, AOL plans a "full range" of search services that include finding products and services locally, as well as on the general web.

Rival Yahoo has built its business around entertainment for years, and is also heavily into video. MSN has also made multimedia content its focus. In online advertising connected to search results, however, search giant Google Inc. has raked in the most revenue, so far.

Nevertheless, Joe Wilcox, analyst for JupiterResearch, said there's plenty of advertising dollars to go around, and he expects all the major portals to benefit from the growth in online advertising. Advertisers generally spend on multiple portals, much like they spend on multiple TV networks.

"There's no reason why the model will be any different online," Wilcox said Wednesday.

However, AOL's biggest potential advantage over its rival is in unique content, Wilcox said. The Dulles, Va., company, for example, develops its own music videos through its online service Music Sessions and Music Live, and it's parent company, media conglomerate Time Warner Inc., could work with its subsidiary one day to develop more original content.

Time Warner hasn't worked closely with AOL yet on content, but "you show a business model that makes money and the earth moves," Wilcox said.

"AOL is just beginning to tap the full range of content resources that could be at its disposable," the analyst said.

AOL's focus on broadband households makes sense, given the latter's growth. Broadband lines worldwide reached 164 million as of the end of March, an increase of 52 million lines since the same month a year ago, according to research firm Point Topic. The United States is the largest market with 36.5 million lines.

Broadband users also tend to spend more time and money online, experts said.

The current version of the AOL portal has more than 25 programming channels with content from music, radio, movies and games to news, sports and personal finance. The channels include the AOL Coaches collection of self-help video that cover dieting and fitness, finances, family and relationships and careers.

The portal also offers AOL's popular instant messaging service, web mail with 2GB of storage and a blogging service. AOL plans to integrate its instant messaging service, called AIM, in many of its portal services, so a person can send an instant message to someone online while shopping, checking email or doing other activities on the network, Liu said.

The portal also provides access to a web browsing application called AOL Explorer that integrates with the company's email and IM services, its search and other services for mobile phones and a picture service for sharing photos online.

The portal is expected to serve as the hub for all of AOL's web brands and services, including MapQuest, Moviefone, the Netscape browser, Pinpoint Travel and InStore. Collectively, these sites and other AOL services attract nearly 110 million unique visitors a month, the company said.

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