Will Deal Spur Rivals to Action?

Nov 14, 2005  •  Post A Comment

America Online is using old television shows to get back into the game with two high-tech rivals, Yahoo and Google-and those rivals are paying close attention.

With its revenues from dial-up subscribers hemorrhaging, AOL has opened its content to the free Internet and embraced the growing ad revenues of broadband.

“We have thought of this as a very natural progression with respect to both where we’re headed as a company with the launch of the new AOL.com, and our focus on programming and video across many different categories,” said Kevin Conroy, executive VP of AOL Media Networks, of the launch of the new In2TV network.

Yahoo and Google are looking at how to handle television too. “In quite different ways, all have their eyes on the video universe,” said Leland Westerfield, managing partner at Harris Nesbitt. And AOL’s deal for Warner Bros. programming might launch a battle for access to other programming.

“If studios strike exclusive online IP television deals, there would be a rush to strike similar arrangements before all the entertainment libraries have been spoken for,” he said.

Yahoo’s video plans are expected to become more clear next year. Former ABC programming executive Lloyd Braun joined Yahoo a year ago as head of its media group, overseeing all creative and business aspects of Yahoo’s content properties, including music, games, movies, television, news, weather and sports.

Yahoo is expected to use video to drive traffic to other parts of its site. While an archive of programming might be part of Yahoo’s plan, Yahoo is also said to be looking at a joint production and promotion deal involving original content. It has already tested video with a preview of the WB Network show “Supernatural,” and last week made a deal with TiVo that allows My Yahoo users to program their DVRs over the Internet. Some observers said the deal with TiVo may give Yahoo an avenue for moving video content from the Internet to viewers’ TV screens.

A Yahoo executive was not available to comment on the company’s plans or AOL’s In2TV at press time.

Analysts said Google’s video strategy-built around search rather than owning content-is unlikely to be impacted by AOL’s announcement.

“Google is not under pressure to do anything because their core business is the most successful core business of anybody’s these days,” said Will Richmond, president of Broadband Directions. “When they do want to act, I think they’ll bring a very technology-focused solution to the market, as opposed to a more media-centric solution like AOL or Yahoo might bring.”

A Google spokesman did not return calls or e-mails.