Ovum viewed the portal as promising due to its large inventory of content and plans to showcase popular brands. If it succeeds in its goals, it will be the richest video site available.
However, by adopting such a broad approach, AOL may have problems targeting specialist users, the company warned.
The ISP side of AOL has been steadily losing customers for the past two years. Investing in a video portal allows it to make use of assets owned by parent company Warner Bros.
"We think that AOL video comes at a time when AOL is in much need of reinventing itself from a me-too internet access to a glamorous service open-access broadband content company," said Josette Bonte, VP of Content and IPTV at Ovum.
"If it executes its plan as stated in the announcement, then AOL Video will become the richest video destination on the web.
"The content should find enthusiasts among a variety of demographic segments, with its wide range of mainstream and niche content.
"The only real caveat may become one of true identity. By trying to appeal to such broad demographics, AOL may in fact have trouble formulating its market-entry awareness strategy and leave a lot of users eager to return to t heir speciality sites," he added.
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