America Online will launch AOL TV in early 1999.
AOL GETTING READY TO LEAP INTO TELEVISION
Diane Mermiga
11/02/98
Electronic Media
Page 1
Copyright (C) 1998 Crain Communications, Inc. All rights reserved.
Dulles, Va. -- America Online is preparing a new service, AOL TV , that would launch in early 1999, just as the digital TV market is exploding into hundreds of new program and interactive services.
AOL TV 's appeal to passive TV viewers who are not online will be providing a way to navigate the rapidly expanding TV landscape. Use of a specially designed remote control device or keyboard will ease TV viewers into online functions with a single click.
AOL TV will let users "bookmark" their favorite channels or programs; access TV-related information and interviews or program recommendations from other AOL users; and electronically communicate with "buddies" about TV shows. They also will be able to cyber shop for TV-related merchandise.
"We are trying to work what is a very strong habit for people: dealing with their TV. Television is a sacred altar in people's homes," said Barry Schuler, president of AOL Interactive Services.
"We are not trying to turn the TV into a big computer monitor. We want people to ease their way into it and make their TV experience better right off the bat, and then explore other things at their own pace," Mr. Schuler said.
The major difference between the proposed AOL TV and Microsoft Corp.'s nascent similar service, WebTV, is marketing: AOL can leverage off its branded online service and growing subscriber base. Initially, AOL TV will be marketed directly to AOL members online.
"If you can get 1 [million] or 2 million devices in use, you have critical mass, and you can get the ball rolling. We have a tremendous advantage in that we can sell directly to our online audience who might want another way to access our service," an AOL executive said.
Launching AOL TV is one of the biggest competitive leaps and creative challenges for AOL since it embraced the World Wide Web, catapulting itself into the world's largest online service.
" AOL TV is part of a larger, long-term strategy to put AOL places other than the desktop," AOL Chairman and CEO Steve Case said.
"As the interactive media move toward new devices and new technologies and as they become ready for mass market, we will offer a full complement of interactive services like AOL TV ," Mr. Case said.
AOL last week said it gained nearly 1 million new subscribers last quarter, expanding its base to 15.5 million members (including CompuServe).
However, industry analysts say even AOL must grow its subscribers at least 50 percent over the next several years to command more Internet ad spending.
Although Internet services like AOL will continue to benefit from the uptick in personal computer sales, AOL increasingly is focused on reaching the 75 percent of U.S. homes without computers through a variety of initiatives that include AOL TV .
AOL also is negotiating with cable and telephone companies to be the interactive gatekeeper of their new high-speed access services. Separately, AOL TV could become an offering on digital cable's new platform, sources say.
"When you're watching TV, what's your biggest problem? It's finding anything you want. A little bit of connectivity will help a lot," AOL President Bob Pittman told ELECTRONIC MEDIA.
"We will take the best elements of AOL -- that navigate, organize and manage material in a fun and easy way -- and create a different service under the AOL brand that enhances the television experience," said Mr. Pittman, who as an MTV co-founder created the promotional tease, "I want my MTV."
"You can't just slap AOL as we know it on a TV screen. The market does not want a cheap PC."
AOL is testing an AOL TV prototype to determine content, marketing and price. An AOL TV timetable and launch partners are still being decided.
AOL is working with major equipment and content partners -- including Sony Corp., Viacom and Time Warner -- to create new AOL-branded products and services to support its new "AOL Everywhere, AOL Anywhere" campaign. For instance, AOL users eventually will be able to access their e-mail by cellular phone.
But, AOL TV will be its most ambitious non-PC effort. AOL TV , which will have a distinctly different presence from the core online service, will allow existing subscribers to access e-mail and other AOL services using the simplified icons and functions of the new AOL 4.0 software.
AOL technicians have been working with Network Computing, a Netscape Communications Corp. venture that provides the access equipment for NetChannel, a Web-enhanced television company AOL acquired in May.
The interim device used by NetChannel provides online functions by way of telephone connection and plugs into the TV like a VCR.
The device most likely will be leased to AOL TV subscribers as part of a single service fee, which will be less for existing AOL members.
AOL is working with many of its existing online content and advertising partners to provide special applications for AOL TV , which will be "a work in progress" even after it launches, AOL executives say.
Once launched, it is possible the company could operate AOL TV as a stand-alone entity in which strategic partners have an equity interest, sources say.
Mr. Pittman has spent the past year tightening AOL's balance sheet, refocusing its operations and expanding its partnerships with players whose content will especially appeal to TV's mass-market viewers.
AOL recently paid an estimated $9 million to Time Inc.'s new media unit for exclusive online rights to People and tenant access to other Time magazines including Entertainment Weekly and Money.
AOL also has announced a new partnership with Geraldine Laybourne's planned Oxygen cable channel to develop new female-related Web sites.
AOL also signed a three-year $23 million agreement with CBS SportsLine to provide sports news and on-air promotion of AOL on CBS Sports telecasts.
"Integrating audience participation into programming will stimulate new content forms that we can only dream about today," said one AOL executive. "But it is going to take time. It has to be a slow and careful progression because, if you screw up people's TV experience, they won't do it or it will be a long time before they try it again."
Photo/Graphic: Under President Bob Pittman (left) and Chairman and CEO Steve Case, America Online will launch AOL TV in early 1999. |
