Why is Verizon Buying AOL?

Verizon made a big splash today with the announcement to acquire AOL for $4.4 billion, but why?

AOL once again comes with Internet access. Wait for your CD to arrive in your mail like in the 90s (weird fact, 2.1 million people are still using AOL Dial-up). Verizon acquires AOL in a surprising $4.4 Billion deal. Why is Verizon getting into the content business?

Lowell McAdam, Verizon chairman and CEO, said: “Verizon’s vision is to provide customers with a premium digital experience based on a global multiscreen network platform. This acquisition supports our strategy to provide a cross-screen connection for consumers, creators and advertisers to deliver that premium customer experience.”

He added, “AOL has once again become a digital trailblazer, and we are excited at the prospect of charting a new course together in the digitally connected world. At Verizon, we’ve been strategically investing in emerging technology, including Verizon Digital Media Services and OTT, that taps into the market shift to digital content and advertising. AOL’s advertising model aligns with this approach, and the advertising platform provides a key tool for us to develop future revenue streams.”

AOL has with The Huffington Post, TechCrunch, Engadget, MAKERS and AOL.com and Emmy-nominated original video content highly attractive content. Is content though the though the future for a mobile carrier? There is though one common thing that might be the future. Over-the-top video.

AOL CEO Tim Armstrong explains it: “Verizon is a leader in mobile and OTT connected platforms, and the combination of Verizon and AOL creates a unique and scaled mobile and OTT media platform for creators, consumers and advertisers. The visions of Verizon and AOL are shared; the companies have existing successful partnerships, and we are excited to work with the team at Verizon to create the next generation of media through mobile and video.”

Verizon and AOL together will have competitive OTT offering that other companies will be challenged to match.

What is OTT?

Over-the-top (OTT) refers to delivery of audio, video, and other media over the Internet without the involvement of the operator in the control or distribution of the content. For instance SlingTV or Amazon Instant Video is OTT video. The Internet provider /4/be aware of the contents of the Internet Protocol packets but is not responsible for, nor able to control, the viewing abilities, copyrights, and/or other redistribution of the content. This model contrasts with the purchasing or rental of video or audio content from an Internet service provider (ISP), such as pay television video on demand or an IPTV video service, like AT&T U-Verse.