US mobile network Verizon has announced plans to acquire AOL for $4.4 billion (2.81 billion), as it aims to build its mobile video and advertising offerings to take on the bigwigs like Google.
AOL owns a rather broad range of media properties, including the Huffington Post, Techcrunch, Engadget, Makers and AOL.com. By buying the ISP, Verizon is hoping it can become a content producer just like some of the UK's networks including BT and Vodafone.
Verizon's president of operations, John Stratton said the company wanted to buy AOL to boost its subscriptions too. "Certainly the subscription business and the content businesses are very noteworthy. For us, the principal interest was around the ad tech platform," he explained to a Jefferies investor conference yesterday.
Verizon wants to launch a video service specifically for mobile devices, monetised by paid, free and ad-supported content, but steering away from traditional TV content. Instead, it would feature 30 or 60-minute made-for-mobile TV shows, beamed to devices via cellular networks and including on-demand media.
Verizon will also boost its internet of things (IoT) efforts, building upon its 4G wireless video and internet video services.
AOL chief executive Tim Armstrong said: "We are excited to work with the team at Verizon to create the next generation of media through mobile and video.
"[It will] create what I think is the largest mobile and video business in the United States. This gives us a real seat at the table for the future of media and technology," he told the Wall Street Journal.
Armstrong used to work for Google and, since joining AOL in 2009, he has been pushing forward advertising on the platform, including launching a programmatic platform similar to AdWords, that allows marketers to bid for inventory automatically. He will remain in charge of the AOL part of the business when it merges with Verizon this summer.
