Optimism High for 9.0 - Multichannel

Optimism High for 9.0

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America Online last week pulled the wraps off AOL 9.0, new software filled with enhancements the online service provider hopes will appeal to both narrowband and broadband subscribers.

The No. 1 U.S. Internet-service provider has high hopes for this iteration of its software, tasked with the twin chores of retaining narrowband subscribers while helping consumers who migrate to broadband to retain AOL service.

During AOL Time Warner Inc.'s recent second-quarter earnings call, chairman and CEO Richard Parsons made a point of crowing about the service.

"The AOL 9.0 Optimized service is a terrific improvement and reflects a tremendous amount of effort from the America Online operation to get this out and to market," Parsons said on the July 23 call.

Added Don Logan, chairman of the media and communications group: "We're very enthusiastic about this. The buzz on the new product is really quite astoundingly good. We've added a lot of new functions and new features that hopefully will improve churn."

Using the new features, consumers will be able to:

  • Check e-mail, instant messages and financial updates from the welcome screen by placing the cursor above the toolbar;
  • Use customized spam e-mail filters;
  • Share calendars with other family members more easily;
  • More precisely manage the time their children spend online;
  • Integrate digital photos more easily throughout the service;
  • Switch to a voice conversation during an instant message;
  • Use 20 Megabytes of memory space to store old e-mail;
  • Use an accelerator that speeds dial-up Web surfing;
  • View video clips with less buffering;
  • Use automatic virus scanning;
  • And benefit from customized firewalls.

The company interviewed more than 25,000 of its subscribers, or "members," over the past year, which resulted in four areas of focus on the broadband side:

Safety and security, or "make my family safe"; rich communications, or e-mail with huge amounts of storage and rich instant messaging to drag and drop pictures; convenience, with such items as phone and movie listings; and content that's offered as a catalyst to drive members to each other.

To that end, Hooks made note of new features on the AOL calendar. For instance, various members of a household can update a family calendar at anytime using the always-on broadband connection.

Updates to AOL Journals also will help broadband subscribers who spend an average of two hours and 55 minutes on Web log sites, versus 37 minutes for narrowband subscribers.

"The calendar and address book are fantastic," Hook said. "Picture manipulation is another real fast, real simple application."

On the broadband-content side, AOL boasts premium Internet content services that executives say would cost more than $100 if purchased separately. That includes AOL Radio, video highlights from Major League Baseball and the National Football League, National Basketball Association, National Hockey League and National Association for Stock Car Auto Racing, and news from Cable News Network and ABC News.com.

AOL Broadband is stepping up its live concert efforts, added Hook, focusing on events in the top 20 DMAs. A recent Foo Fighters concert on AOL generated 250,000 streams in its first 24 hours.

"Now you'll be able to share concerts and watch them together," Hooks said. "And we're making the concerts full-screen experiences."

According to research on AOL's broadband customer base, 62% of subscribers have downloaded a movie trailer at one time or another, 52% have watched a music video and 35% have watched a video newscast.

AOL said its broadband users view 27% more video than other broadband users.

The ISP is also marketing several premium services above the $14.95 "bring your own access" price, including Call Alert, Internet call waiting, voicemail and anti-virus programs.

Hook said both the narrowband and broadband content sides of AOL's business tell developers what's needed in the next round of software.

The stakes are high and the numbers tell the story: AOL lost 846,000 narrowband subscribers in the second quarter, while picking up 300,000 broadband subscribers (of a 2.2 million total base). Broadband consumers pay $15 to maintain AOL features on top of paying for high-speed service from a cable or DSL provider.

Analysts think that trend will continue. "While we are taking a more conservative view toward narrowband subscribers going forward," wrote Richard Greenfield, an analyst with Fulcrum Global Partners, "we are increasingly encouraged with the process of the Broadband BYOA model, especially with the coming launch of AOL 9.0 Optimized and its associated marketing campaign."

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