Arabian Business / Accenture Web Index - November 2002 Report

AOL predicts lean times in 2003 as online advertising slows down; in the region, the push to grow internet usage continues

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By  David Ingham Published  January 9, 2003

Ad slump hits world’s largest ISP|~||~||~|Click here to view the Arabian Business/Accenture Web Index for November 2002"

AOL Time Warner, under fire from regulators and with stagnating revenue, is aiming to boost internet subscribers by offering internet subscribers exclusive access to news and features from its magazines and CNN news channel. The company has warned of a 40% drop in advertising revenue in 2003.

AOL’s chief financial officer, Wayne Pace, warned that the drop in advertising revenue will offset any gains the company makes in subscriber revenue. “It is clear that 2003 will be a transition year, but with this plan we expect America Online to deliver solid growth beginning in 2004,” he said.

The announcement came as AOL unveiled a strategy to reinvigorate the flagging America Online division. AOL users will be offered features from Time magazine, US gossip magazine People and Sports Illustrated.
Subscribers will be able to read articles from the magazines at no extra charge and will be given free access to CNN’s online video service, which usually costs $4.95 (£3.18) a month. Under the new strategy, AOL will also put more effort into selling higher margin additional services to existing subscribers to offset a slowdown in the growth of new subscribers.

Revenue at AOL, which is facing a government investigation into its accounting practices, is expected to be flat in 2003. “Even though it’s early to give a precise 2003 outlook for America Online, management has just concluded a comprehensive review of its operations and has developed an achievable business plan to build a strong foundation for the future,” said Pace. “It is clear that 2003 will be a transition year, but with this plan we expect America Online once again to deliver solid EBITDA [earnings before interest, taxes, depreciation and amortisation] growth beginning in 2004.”
Here in the Middle East, early signs indicate that 2003 that service providers will be looking to achieve two objectives. On the one hand, they’ll be looking to sign up more first time internet users, but at the same time trying to develop broadband content.

Emirates Internet and Multimedia (EIM) has more than its fair share of initiatives to try to achieve the first objective. On that front, it has recently worked with Citibank UAE, a member of Citigroup to set up special internet kiosks at selected Citi branches.

The kiosks, starting with Al Wasl Branch, will provide Citibank customers withinstant access to banking services on the net, including Citibank Online. “This is an innovative and extremely exciting initiative. It comes at a time when an ever-increasing number of Citibank customers are appreciating the speed, convenience and security Citibank Online offers,” says Sankar Krishnan, Citibank’s regional e-husiness head. “Citibank is a byword for innovative products and services and the Internet is a source of unlimited potential. Our partnership with EIM will no doubt provide customers extra flexibility and add an element of fun to their daily banking experience.”

Public Internet kiosks are already in key strategic locations around the UAE, including airports, petrol stations and other commercial buildings. EIM has also launched Internet Surfing Centres (Al Marwoud) and numerous educational programmes in UAE schools.

Click here to view the Arabian Business/Accenture Web Index for November 2002"

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