AOL joins the rush for exclusive video online

AOL (AOL), which teetered on the edge of irrelevancy not long ago, is trying to assert itself in a media corner that has Madison Avenue and Hollywood all excited -- exclusive online video.

The New York Internet company on Tuesday announced what it called a "new premium video experience" for its AOL.com homepage that will feature content from partners such as HSN, Conde Nast and The Wall Street Journal along with expert advice on a variety of subjects such as personal finance.

New York-based AOL's video ambitions don't end there. The company is backing a talk show hosted by actor Steve Buscemi ("The Sopranos" and "Boardwalk Empire") along with original programs connected to Sarah Jessica Parker and Gwyneth Paltrow.

Although AOL's video ambitions are impressive, they aren't unique. Rivals such as Yahoo (YHOO) are also racing to become players in the world of long-form video entertainment, and given the success Netflix (NFLX) enjoyed with "House of Cards," it's easy to see why. As of the end of the first quarter, Netflix had 48 million subscribers. Amazon (AMZN), which saw video streams from its Prime service nearly triple last year, is on the video hunt, too.

"For premium content sites, which I define as destination sites due to their branded and established content offering, there is still room to grow for video content. This also applies to the digital domains of established broadcast TV and cable channels where video content is a natural extension," said Tom Adams, director of SQAD WebCosts, which tracks online ad rates, in an email.

SQAD data show that the average cost per thousand impressions (CPM) for an in-stream online video ad in 2013 was $23.03, or 38% higher than the comparable cable TV cost. Both lagged network TV, which had an average CPM of $44.11. Online display ads averaged a CPM of $10.88.

But as David Carr noted in The New York Times, finding hits isn't any easier for new video entrants than for established broadcast and cable networks. Indeed, Yahoo CEO Marissa Mayer is considering 100 different projects and is particularly keen on finding shows that are "ready to launch" and "don't require a lot of development."

Unfortunately, every TV executive in Hollywood and New York is looking for the same thing -- and more often than not fails to find it.
  • Jonathan Berr

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