America Online has begun beta testing a streaming media video service through its AOL Instant Messenger software.

Dubbed AIM Video, the service will feature music videos, movie trailers, entertainment news, celebrity interviews and sports highlights.

Other digital content originates from a horizontal expansion of AOL's members-only AOL Television channel that extends AIM's 36 million active users an all-access pass to proprietary comedy, news and other features.

At the moment, AOL has limited content to a total of twelve clips from six different channels including: "What's New," "Music," "Movies & TV," "News & Money," "Lifestyles," and "Sports." Content is provided by AOL's parent company Time Warner, and partners such as film studios, record companies and television networks.

The service is powered by the AOL media platform, which built around the core components of Nullsoft's Winamp player. Looking further under the hood, streaming media support is provided by Nullsoft Video technology (NSV) and other multimedia technologies from RealNetworks and Apple. Video may be enlarged to fill the screen.

AIM Video is exposed throughout the client, and can be found in the AIM Welcome Screen, Fun Tools rail on the AIM Buddy List, as well as on individual message windows on a rotational basis. AIM Video is free; like AOL rival MSN's MSN Video, AIM Video is supported entirely by advertising dollars obtained from the sale of 30 second pre-roll video ads.

A similar service will go live in unison with AIM Video on the AOL.com portal site. AOL has planned to redesign the site to include content feeds alongside Internet search and links to popular AOL.com destinations.

Video advertisements have already appeared in the AIM client in the form of Buddy List Super Videos. Buddy List Super Videos are 30-second live action video shorts that have served as a testbed of concept over the past month.

Ultimately, consumers will decide whether or not AOL has struck the right balance between its brand development strategy and the quality of the AIM user experience by also choosing to integrate a video service into a real-time communications product. According to AOL, customers have accepted video advertisements favorably. An AOL spokesperson told BetaNews that the ads deliver higher click-throughs than previous units that did not contain rich media.

However, AOL runs the risk of modifying the perception -- for better or worse -- its customers have of AIM and could potentially test the limits of their brand loyalty. Comments made by some readers of BetaNews in response to video advertisements have not reflected a positive brand image.

With the release of AIM Video, America Online has exposed a change in its product development process. The merger of AOL Web properties with AIM signals that the company has opted for an integrated development strategy among its functional groups, adding additional contributors to the product development process. In recent days, developers for other AOL Web properties have done the same.

In a meeting with BetaNews, AOL Search Vice President and General Manager Gerry Campbell stressed that AOL was above all, a media company. As first reported by BetaNews, AOL has modified its AOL Search results with "Snapshots" that layer specialized editorial content on top of Google search results. The Snapshot strategy is primarily intended to conserve members' time by making it easier to search the Web.

That said, the use of Time Warner media content adds internal stakeholders to the product development process for both AIM and AOL Search and opens the door for additional marketing opportunities.

With basic IM features such as instant messaging and file transfer available for free, AOL must turn to other revenue opportunities to make money from AIM. Thus far, AOL has begun to sell premium options to customers who are interested in personalizing their chat sessions with AIM Expressions. AIM Video is another example of a value added incentive that generates revenue.

AIM Video is available starting today through the AOL Instant Messenger client.

From BetaNews