AOL's recent drive into web TV will have profound ramifications for the future of entertainment, and could turn into the broadcast industry equivalent of Apple's creation of iTunes for the music industry, internet experts have predicted.
The current offering has limited content, including music videos, movie trailers and video game previews, but AOL said it will offer DVD-quality video from its AOL Video library which includes more than 18,000 titles.
"Gartner believes that this single development should be considered the broadcast industry equivalent of Apple's creation of iTunes. AOL is furthering its stated strategy of becoming the leading online video portal," stated a Gartner advisory by analysts Mike McGuire and Allen Weiner.
"By building an economically viable platform using a P2P-derived grid distribution system from Kontiki to efficiently stream or download video content directly to end users, AOL is setting the direction for the emerging TV-over-the-web business."
The analyst firm believes that AOL's strategy, and the initial foundation of Hi-Q Video, was secure and extensible enough to persuade Warner Bros Studios to digitise and prepare its hundreds of TV shows and other video properties for online distribution.
"AOL's deployment of an advertising-based model is a major step in making TV-over-the-web a legitimate business model," Gartner stated.
"The ability to integrate with third-party ad-serving networks, and with advertisers directly, showcases the power of efficient delivery of video content to targeted individuals whose activity can be measured."
However, the study warned that it remains unclear whether consumers will be able to move this content onto other devices such as iPods.
Gartner advises content providers to consider AOL's move as a signal that " TV-over-the-web is becoming a serious channel".
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