AOL, Phillips Eye New E-Commerce Platforms

AOL Time Warner (NYSE: AOL) said Thursday it has struck an expanded marketing deal with Philips Electronics (NYSE: PHG), under which the two companies will pursue development of new television-based e-commerce platforms.

Focused largely on cooperative marketing in the European market, where Amsterdam-based Phillips has a stronghold, the deal also calls for Philips and AOL to work together to "determine the next generation of set-top boxes and opportunities for online interactive services."

AOL and Philips have been longtime partners. In fact, the highly publicized but tepidly received AOLTV service, which was rolled out in U.S. test markets last year, uses a Philips set-top box.

Patience Required

Overall, interactive television has been slow to catch on with its Internet and e-commerce target audience. Still, analysts continue to predict it will become a force in e-commerce, with Jupiter Media Metrix (Nasdaq: JMXI) saying in June that interactive television shopping will be worth US$3.4 billion by 2005.

Media giants have tried to capitalize on what is expected to be a widespread convergence of the two media. Last month, Yahoo! linked up with ShopNBC.com that will tie Internet shopping and a shop-at-home television network together.

Future Projects

In addition to AOL and Phillips promoting the others' products and services, Philips consumer electronics products will be featured on the Shop@AOL site.

"This alliance fits perfectly with our ambition to build a high growth technology company and is powerful for both Philips and AOL Time Warner," Philips chief executive officer Gerard Kleisterlee said.

In early trading Thursday, AOL stock was up 2.9 percent to $49.91. Philips had risen 3.6 percent to $25.68.

Multichannel Effort

In the time since its merger with Time Warner created a media giant, AOL has been busy striking marketing and e-commerce partnerships aimed at leveraging its now sprawling media properties, which include the Web, television and magazines.

AOL has expanded a deal with General Motors and has signed marketing deals with Nestle USA. Earlier this week, AOL also became part of the National Football League's overall marketing scheme, valued at $110 million.

However, not even the alliance with a real-world media company has been able to completely protect AOL from the economic downturn. According to a slew of published reports, AOL fired about 30 workers from its online unit earlier this week, just ahead of an earnings report slated for next week.