Verizon has made a move toward entering the lucrative online video sector through its purchase of AOL for US$4.4 billion.
The sector has an estimated value of close to US$600 billion. Many analysts say Verizon can use AOL’s advertising platform to catch up to major industry players, and stream video via mobile and broadband to gain more advertising revenue.
For the purchase, Verizon will pay cash of US$50 per AOL share, or 15 percent more than AOL’s closing price on Monday. Completion of the sale is expected this summer after regulatory review.
Verizon seeks to cash in on the burgeoning market for digital advertising given the advent of new mobile devices and rapidly changing consumer behavior. EMarketer says that this year, more than 153 million people in the United States will view TV shows on digital devices at least once a month.
Others, however, are not convinced that the deal represents much of a boon for Verizon. Mirimam Gottfried of the Wall Street Journal said of the move, “For Verizon, dialing up AOL isn’t that big a gamble. Likewise, though, it also isn’t the kind of deal that will put it on the same tech playing field as Facebook, Apple and Google.”
By Chun Go-eun
