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Tech Industry

AOL goes interactive with OpenTV

The companies say they will jointly develop AOL applications to run on OpenTV software, and AOL will take a stake in the digital set-top box software maker.

America Online and OpenTV yesterday said they will jointly develop AOL applications to run on OpenTV software, and AOL will take a stake in the digital set-top box software maker.

Under the terms of the agreement, Internet giant AOL and OpenTV, which competes against Microsoft's WebTV, said they will work together to bring some of AOL's widely used communications features, such as email and instant messaging, to OpenTV's interactive television software.

Financial terms of AOL's investment in OpenTV were not disclosed. However, OpenTV also announced that it has received investments from General Instrument, Liberty Digital, News Corporation, and Time Warner totaling around $31.25 million, which includes AOL's stake and an investment increase made by existing investor Sun Microsystems.

OpenTV said its software is used in more than 4.3 million digital set-top boxes. To date, the company said its software is used by 13 television networks, including U.K.-based British Sky Broadcasting and TPS in France.

In addition, OpenTV said EchoStar's Dish Network is scheduled to launch interactive services using its software in the United States early next year. As reported, Echostar said it will be offering set-top boxes with technology from OpenTV that can be used to offer services such as shopping and banking over the TV set, as well as enhanced programs such as sports events with on-demand statistics.

The partnership between AOL and OpenTV comes at a time when interactive television is gaining popularity among giants such as AT&T, Intel, Microsoft, and Motorola.

In August, AOL invested in TiVo and partnered with the company to expand its interactive TV business. AOL also recently made a $1.5 billion investment in Hughes Electronics, parent company of satellite TV and Internet services DirecTV and DirecPC, to keep from getting pushed aside in the high-speed access market.

While OpenTV competes with AOL rival Microsoft's WebTV, AOL also competes with the software giant on several fronts, including Net access services, instant messaging software, and portal sites.

Separately, MIH Holdings, the large premium TV holding company that owns OpenTV, said its OpenTV unit will sell new shares in an initial public offering estimated at $50 million. The company has not yet priced its shares, but plans to trade under the ticker symbol "OPTV" on the Nasdaq, according to a recent filing with the Securities and Exchange Commission. Lead underwriters are Merrill Lynch Pierce Fenner & Smith and Thomas Weisel Partners.