June 23, 2015
It's a small, small digital world.
Completing a story that began with Internet domination in the 1990s, AOL Inc. (NYSE: AOL) officially became a wholly owned subsidiary of Verizon Communications Inc. (NYSE: VZ) Tuesday in the close of a deal worth approximately $4.4 billion. AOL CEO Tim Armstrong will continue to lead the AOL business, now reporting up to Marni Walden, Verizon EVP and president of Product Innovation and New Businesses. Bob Toohey, president of Verizon Digital Media Services, will report directly to Armstrong.
On a press call to discuss the acquisition, both Walden and Armstrong emphasized Verizon's goal to become the leading media technology company in the world, with Walden noting that the deal is about "driving value above our access network" and creating "a new revenue stream above the network." Those words echo the sentiments of Verizon CEO Lowell McAdam earlier this year, who said of the AOL purchase that it will provide "customers with a premium digital experience based on a global multiscreen network platform." (See Verizon's $4.4B AOL Buy a Digital Media Play.)
Walden also stated that "AOL's advertising platform is an exceptional fit," suggesting that ad-related revenues will be a large part of Verizon's media future.
For Armstrong's part, the AOL leader was equally enthusiastic about joining forces with Verizon. Armstrong said he believes the combination of the two companies "will give us a big seat at a big table in the future."
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Without going into too much detail, Walden also shared some new information about Verizon's planned launch of a mobile-first video product later this summer.
"Today we are securing content from live content, emerging content [and] on-demand content, and we're planning on having a number of fresh titles in the product," said Walden. She explained that the new Verizon video service will work over any network, but "will work best over Verizon's network," and that some capabilities, like video delivered over Verizon's LTE Broadcast platform, will only be available for Verizon customers. (See Verizon Scores New OTT Content Deals and LTE Upgrades Support Verizon's AOL Move.)
Walden said there are no immediate plans to offer a global video service, but acknowledged that AOL gives Verizon better capability to expand around the world in the future.
In one final note, Walden also clarified that "ad-sponsored data is part of the product offering." That statement refers to the concept of having sponsors pay for mobile delivery so that certain content doesn't eat into customers' capped mobile data plans. The idea is raising some net neutrality hackles, but Walden said Verizon believes it is well within its rights to deliver such a service to advertisers and consumers.
— Mari Silbey, Senior Editor, Cable/Video, Light Reading
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