AOL Takes On Partner In Interactive TV Battle

America Online, Inc. and interactive television software developer OpenTV announced today that they are joining forces to deliver AOL applications to consumers via OpenTV’s interactive television platform.

Industry observers feel that this move is the latest by the number one online service provider to counter the thrust that rival Microsoft Corp. is making with its subsidiary WebTV — an interactive TV platform which has built an 800,000-member subscriber base.

Analysts also point out that the timing of the partnership coincides with recent developments in Europe that have been making interactive TV a significant platform for delivering e-commerce to consumers on the continent.

Jumpstarting E-Commerce In UK

Just a few weeks ago, OpenTV announced a partnership with British Sky Broadcasting to bring e-commerce services such as shopping and banking to UK consumers.

OpenTV will instantly allow 1 million British viewers to pay their bills, buy groceries or even order dinner by simply typing their orders on the portable keyboards that are hooked to their sets.

Some analysts feel that the rollout of this service could be the easiest and quickest way for the UK to jumpstart itse-commerce — which is lagging far behind both the U.S. and some of its European neighbors.

Hedging Its Bets

By partnering with the Mountain View, California-based OpenTV, AOL seems to be hedging its bets on whether computers, handheld devices or TV sets will ultimately dominate the e-commerce arena.

Under the terms of the agreement, AOL and OpenTV will work to bring some of AOL’s most popular communications features to the OpenTV platform, including e-mail and instant messaging.

“Our AOL Anywhere strategy is based on bringing our most popular services and features to different devices and platforms,” said Barry Schuler, president of AOL Interactive Services. “We’re pleased to work with OpenTV to explore bringing some of our communications features to their platform, enabling interactive services over digital broadcast video systems.”

Convergence Of Platforms

OpenTV CEO Jan Steenkamp believes that the partnership will also offer U.S. users a seamless entry into the online world.

“With almost 99 percent of American households having one or more televisions, it makes the most sense to deliver the promise of convergence through the television,” said Steenkamp. “What convergence means to most consumers is interactive information combined with everything they like about their favorite TV programming, and we think the agreement between AOL and OpenTV will enable us to deliver key AOL communications applications along with your favorite TV programs.”

About OpenTV

Closely-held OpenTV provides interactive television software for digital set-top boxes that deliver interactive services via digital satellite and cable. The company’s set-top box software has been shipped with, or installed in, more than 4.3 million digital set-top boxes worldwide.

To date, OpenTV software solutions have been deployed by 13 television networks worldwide, including British Sky Broadcasting in the United Kingdom and TPS in France. EchoStar’s DISH Network(TM) is scheduled to launch interactive services utilizing OpenTV software in the U.S. early next year.

Seven leading Internet and broadcast companies, including America Online (NYSE:AOL), General Instrument (NYSE:GIC), Liberty Digital (Nasdaq:LDIG), News Corporation (NYSE:NWS) and Time Warner (NYSE:TWX) in addition to Sun Microsystems and MIH Limited (Nasdaq:MIHL) have pumped an undisclosed amount of money into OpenTV.