Byline: Valerie Seckler

NEW YORK — America Online already dominates the Internet world. Now, it wants to get innovative.
“Interactivity is becoming a way of life; five years ago, that was not the case,” AOL Time Warner chairman Steve Case declared Tuesday, in trumpeting the growth course he expects the media giant to pursue over the next five years.
“Our growth will come through the development of new products and services, integrated across our entertainment, information, communications and media businesses, and they will accelerate our revenue increases,” Case projected in a luncheon speech to investors at UBS Warburg’s 29th Annual Media Week Conference, which concludes here tomorrow at the Grand Hyatt Hotel. “I’ve had two big ideas, and one of them is that our growth will come via innovation — it’s not about cost-cutting.” (The other, he explained, was his belief that a subscription model would work for an Internet service provider like AOL, at a time in the not-too-distant past when a Greek chorus was chanting it wouldn’t work because everything online was free.)
On Tuesday, shares of AOL Time Warner, the world’s largest ISP, added $1.17, or 3.5 percent, to close at $34.75 on the New York Stock Exchange. The stock has ranged as high as $58.51 and as low as $27.40 during the past 52 weeks. For the nine months ended Sept. 30, the company lost $3.1 billion on sales of $27.6 billion.
Noting that a year has passed since the merger between AOL and Time Warner, Case said the mega-entity’s focus has shifted from maxing-out efficiencies to building bridges between its multiple technologies and manifold content. “Now is the time to bring things together in ways we might not have imagined five years ago,” Case contended. “Five years is not that much time,” he added. “Five years ago, digital music wasn’t being downloaded; people like my mother weren’t sending daily e-mail to their nieces at college, and AOL subscribers were spending an [average of an] hour a week online; now, our 32 million members are online an hour a day.”
Among the innovations on AOL Time Warner’s five-year wish list, Case noted, are: the creation of a digital household, via its joint venture with Sony Corp., announced Nov. 12; further development of interactive TV and video products and services, and the rollout of high-speed access to AOL in 20 cities across the U.S., starting next year. (On Nov. 30, the media giant launched AOL high-speed broadband service in New York via Time Warner Cable.)
“We strongly believe in the concept of a digital household, a place where a broadband network would connect all of a home’s media, music, information and other technologies,” Case emphasized. AOL Time Warner’s interactive TV offerings already include recently launched services such as HBO on demand and video on demand, and may eventually encompass futuristic applications like Internet telephony. “We also see ourselves as a communications business,” Case said of the New York-based company commonly viewed as a media concern.
“It would be a mistake to stick to traditional business models,” the AOL Time Warner chairman concluded, “as we will be living in a nontraditional world in the near future.”

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