AOL Goes Hollywood With Video Portal
Friday, August 25, 2006
NEW YORK Aug. 24 -- "Hitch," "24" and "Buffy the Vampire Slayer" are among the movies and television shows that AOL will sell through its new video portal under deals the Internet company has forged with major Hollywood studios.
The partnerships, announced Thursday, represent the Dulles company's latest efforts to become a destination for online video as AOL tries to offset revenue it expects to lose from a recent decision to drop subscription fees for many high-speed customers.
The offerings also mark the latest experiments in online distribution as studios and TV networks try approaches from showing programs free of charge on their Web sites to selling already-aired episodes for $1.99 each through Apple Computer Inc.'s iTunes Music Store, Google Inc.'s video store and others.
The AOL deals, terms for which were not disclosed, are with News Corp.'s 20th Century Fox, Sony Corp.'s Sony Pictures Home Entertainment, NBC Universal's Universal Pictures, and Time Warner Inc.'s Warner Bros. Home Entertainment Group. AOL is a unit of Time Warner. NBC Universal is a joint venture of General Electric Co. and Vivendi Universal.
Users will be able to download selected titles from those studios for $9.99 to $19.99 each, comparable to fees at online services CinemaNow, MovieLink and Guba.
Initial titles available include "Hitch" and "Spider-Man 2." AOL said hundreds of movies will be added within a few weeks and are likely to include "Batman Forever," "The Matrix," "American Pie" and "Dr. Dolittle."
Although users will own the titles, meaning viewing won't be automatically disabled after a day or two, the movies can be played on a limited number of Windows-based personal computers or portable devices that support Microsoft Corp.'s Windows Media Player technology. Limits vary, but they are about four devices for movies and 10 for television shows.
For now, movies may not be burned onto DVDs, a restriction that so far has limited the appeal of movie downloads.
Kevin Conroy, executive vice president at AOL, said support for Apple's Macintosh computers is expected this fall, but users won't be able to transfer the programs to its market-leading iPod players.
AOL already has a partnership with Warner Bros. called "In2TV," for free showings of classics such as "Welcome Back Kotter," "Sisters" and "Growing Pains."
AOL has been trying to increase traffic to its ad-supported Web sites and earlier this month launched a video portal that tries to aggregate clips and full-length programs from around the Internet. Its partners are able to program a number of video-on-demand channels, and the new deals add five from Fox and two from Sony for television programs.
Conroy said AOL's decision to charge for some programs is consistent with its desire to offer users a choice between download-to-own offerings and free, ad-supported items. He said AOL is becoming one of the few places where users can get a range of movies, television shows and music videos; many of its rivals focus on one or the other.
Rob Enderle, an industry analyst with Enderle Group, said that while Apple got a head start with iTunes, AOL still has millions of subscribers connecting through its proprietary software -- a base the company could try to persuade to buy movies.
Benjamin Feingold, president of Sony Pictures Home Entertainment, said he was drawn by the traffic AOL already gets and the fact that Sony can choose between selling programs and giving away ad-supported shows. He said talks were continuing with others, including Apple.
Shares of Time Warner fell 11 cents, or 0.7 percent to close at $16.43 Thursday on the New York Stock Exchange.