Launched in February, Yahoo Platinum charges Web surfers US$9.95 a month for access to streamed video clips of content such as ABC News or CBS' Survivor.
The service will eventually find a home in Yahoo Plus, a premium-services bundle that's been in the works for the past year and is expected to launch as soon as next month, sources said. Yahoo is also expected to expand free video programming throughout its site and offer it as a perk for its broadband access partnerships with SBC Communications and British Telecom.
A Yahoo spokeswoman declined to comment specifically on future changes for Platinum. However, she pointed out that the company's broadband offerings will continue to change.
"Yahoo is committed to being a leader in providing broadband content," spokeswoman Joanna Stevens said. "How it's packaged, priced and presented will evolve over time."
The possibility of offering free video streams comes amid signs of a broader attitude shift among content companies, Web networks and advertisers alike. Some content companies once militant about charging people for their video are becoming more open-minded.
"It's not that (consumers) won't ever pay for it," said one source from a content company, who spoke under the condition of anonymity. "But the jury is still out. Other companies will try a method of giving (video) away for free to see if they can offset costs through advertising."
The launch of Yahoo Plus comes as the company's main rivals, America Online and MSN, are positioning their services in a similar fashion. In response to a decline in the number of dial-up subscribers, AOL and MSN are trying to sell their online software to existing broadband users in hopes of retaining customers who have defected to cable and DSL providers.
Microsoft recently announced plans to launch a new service next year called MSN Video, which will offer news and entertainment clips video advertisements support.
AOL, meanwhile, has made video a key part of its turnaround strategy. The company has been offering its customers a "bring your own access" plan for US$14.95 a month that includes e-mail and other software, as well as exclusive broadband content such as news clips and music video broadcasts. Just this week, the company announced a new sports news program as part of that package.
Creating a video service hits close to home for Yahoo CEO Terry Semel, the former Warner Bros. co-CEO who joined Yahoo in May 2001. The longtime Hollywood mogul has taken steps to boost Yahoo's online entertainment assets, engineering the acquisition of music video site Launch Media and the unveiling of Yahoo Platinum, among other things.
To get Platinum off the ground, Semel hired former Warner Bros. colleague Jim Moloshok as his point man for securing content from media and entertainment companies. Moloshok once ran Entertaindom, Warner Bros.' online entertainment site, but he left in 1999, shortly after parent company Time Warner scrapped plans for a public offering.
During a conference call with Wall Street analysts in July, Semel described Platinum as a "real learning curve" and admitted that Yahoo had not put many resources behind it.
The company has refused to break out subscriber or financial details of Yahoo Platinum, although it has highlighted subscriber gains from other "premium" services such as enhanced e-mail and online personals. Still, the move is a clear admission that Yahoo has failed to convince many Web surfers to pay for its motley collection of video programs.
Even RealNetworks, which operates RealOne, the largest paid video and audio subscription service on the Internet, has seen overall membership stall this year, despite rapid growth in music service Rhapsody and in premium radio.
RealOne charges US$9.95 a month for a bundle of programming called SuperPass, which includes access to movies, news and live audio of Major League Baseball games. RealNetworks announced 1 million paid subscribers in March, sparking a surge of interest in paid video offerings. Since then, however, sign-ups have shown signs of flagging, with total paid subscribers for the company climbing to just 1.15 million in the third quarter, including the addition of 165,000 music subscribers.
