AOL TV Deal Dramatically Increases Broadband Inventory

With 14,000 Episodes From 300 Classic Warner Bros. Series

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NEW YORK ( -- As Warner Bros. serves up thousands of full-length TV episodes from its archives in a partnership with sibling America Online, the industry is watching closely to see if TV proves to be the killer app. The initiative is likely to provide a nice revenue for AOL from advertisers starved for more broadband-video inventory online.

AOL will begin streaming the shows in January through a new channel called In2TV. Except for a few episodes presented sporadically, this is the first time long-form-video programming has been offered online.

For AOL, the initiative is a chance for the portal to demonstrate its superiority as a destination for video on the Web. AOL could use all the help it can get as it tries to remake itself as a content-rich portal inspiring audience loyalty, even as it preens for acquisition by Microsoft or a partnership of Google and Comcast, Internet experts said. For Warner Bros., In2TV offers a post-syndication distribution window -- a way to make money from shows that are otherwise collecting dust on the library shelves.

Mountain Dew close to a deal
One advertiser close to sealing a deal is PepsiCo's Mountain Dew brand, said an executive close to negotiations. In addition to beverages, other sectors considered prime prospects include consumer electronics, wireless, entertainment and package-goods marketers.

Warner Bros. Domestic Cable Distribution has cleared more than 14,000 episodes from 300 series. The programs range from the 1970s hit "Chico and the Man" to the more recent "La Femme Nikita." No programs currently syndicated are on the roster. The channel, In2TV, organizes the programming into six categories: LOL; Dramarama; Toontopia; Heroes and Horror; Rush; and Vintage. Each category offers interactive features unique to the online medium, including polls, trivia quizzes, TV karaoke, jigsaw puzzles, videos of stars and clips of funny scenes from favorite shows to pass along.

"This gives us the opportunity to co-invent a whole new distribution platform," said Eric Frankel, president of Warner Bros. domestic cable distribution.

The advertising community has long talked about interactive TV but outside of a few experiments, it's been more dream than reality.

Both classic and recent programs tend to cycle through the TV landscape, either in syndication or as off-network acquisitions by cable channels. "You get a hit show, it plays for a year, it plays for six years," Mr. Frankel said. "Now we have a place for it after that."

For example, "Full House," which ran for 10 years starting in 1987, has a new life. Last season, it was ABC Family's No. 2 series out of more than 100, and also ranked as Nick-at-Nite's No. 1 program out of 150.

Video-unit ads
Advertising will be video units: 15 to: 30 seconds long. They will appear before and after shows and during natural breaks in the show that occurred for a TV ad. Inventory will be sold through modules and packages. Messages will be limited to two impressions for display ads and four in-stream ads for every 30 minutes of programming. AOL will also offer sponsorship buys for the interactive tools and for entire categories.

Warner Bros. will cull historical ratings data on the shows to help's sales team figure out which demographics particular programs attract. Over time, AOL will build targeted packages for the genre and demographics of individual channels as consumer behavior channels and traffic figures are established.

But analysts are skeptical about whether or not entire TV shows will be successful online. While emphasizing that AOL is an excellent online programmer, David Card, VP-research director, Jupiter Research, said, "I'm not hugely excited about the long-form content delivered to a PC." The quality of video is lower on a PC than on TV, and if many users do their broadband viewing at work, it's not likely that they will be willing to surreptitiously watch an entire TV show there. Plus, he said, there's no guarantee that the AOL audience of mostly women and children will be attracted to old TV programs.

AOL's target market is broad -- men and women 25 to 49, with the heaviest users of AOL Instant Messenger ranging in age from 18 to 34. The portal claims millions of college kids who have only PCs in their dorm rooms will be early adopters to In2TV, but had no solid numbers to back up that claim.

The portal points to the Live 8 concert, which aired last summer on AOL. The anti-hunger fund-raising effort was played 90 million times over the course of the summer.

Kevin Conroy, exec VP, AOL Media Networks, contends most studies indicate online-video watchers prefer short-form programming only because that's what makes up most of the streaming-TV inventory. "Somebody's got to go first and have the guts to try something to build the market," he said. "Putting a show or a series or two out there is not the way to build the market."

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