AOL cues up free video

ISP foresees broadband bonanza and plans to offer on-demand video in coming weeks, has learned.

America Online is set to introduce a free, ad-supported video service, CNET has learned, in a move to diversify its business and seize on a burgeoning sector of online advertising.

The Internet service provider, a unit of Time Warner, will open AOL Video to the public in the coming weeks, Tom Bosco, AOL's director of broadband sales development, said in an interview Thursday. It also will debut Netscape Video, an on-demand video entertainment service, before the end of the year. The moves will follow last month's launch of video programming on AOL Instant Messenger.


What's new:
America Online plans to introduce a free, ad-supported video service in the coming weeks.

Bottom line:
The Net provider foresees a broadband bonanza and is girding for more demand from consumers and advertisers for a TV-like experience on the Internet.

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The new services will feature on-demand video entertainment, with advertising spots similar to those on broadcast television. Some clips will be freely accessible over the Web, while others will be available only to AOL members. Bosco said AOL expects to create an audience of 100 million or more per month for all three video services together.

"Content is king," said Bosco, who six months ago left Microsoft's MSN video unit for AOL. "AOL has access to programming, and that is the name of the game right now."

AOL's video play comes as the Net giant is struggling to evolve from its roots as a dial-up Internet access provider. It is also trying to offset subscriber losses by building a free advertising-supported Web destination, much like rival Yahoo. Key to that strategy is playing up the content and programming ties it has to a media conglomerate parent, as well as its links to Hollywood, so that it can attract an audience large enough to draw in big advertising dollars.

Yahoo and MSN are eager to do the same. The Web portals, among others, are girding for more demand from consumers and advertisers for a TV-like experience on the Internet by lining up content partnerships and promoting new programming.

Call it a perfect storm for Internet publishers: With greater availability of high-speed pipes, consumers are growing accustomed to watching video of news, movies, music, games and original programming on the Internet, either at home or in the office. That, in turn, has opened the opportunity for commercials to come online, and give TV advertisers a new way to spend their money in the face of threats such as ad-skipping devices.

TV-like commercials make up only a sliver of the online advertising pie for now. But that could change as big media companies, such as pharmaceuticals giant Pfizer, begin to allot more of their budgets to services like MSN Video. Daytime TV advertising behemoth Procter & Gamble also has jumped in, advertising on AOL's Video service.

"This is a tipping-point year, in terms of the interest of advertisers starting to move traditional budgets online, and video is an important piece of that," said Mark McLaughlin, an ad sales director for Yahoo's broadband strategy. "The tipping point is also in terms of the scale of people using video."

AOL and many others are placing a bet that TV-like ads will

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