Financial statement analysis
America Online, Inc.
Case Study 1
1. Prior to 1995, why was America Online so successful in the commercial online industry relative to its competitors CompuServe and Prodigy? AOL offered a broad range of features including real-time talk, electronic mail, e-magazines and newspapers, online classes, shopping, and internet access. They also had software for the internet such as for production and distribution of original content, interactive marketing and transactions capabilities, and networks to support the transmission of data. In other words, AOL was a platform that connected the person with the need to internet access with the person who had the internet content by charging membership fees. They offered the most popular sites by signing exclusive contracts with the entrepreneurs that created them. AOL also created many joint ventures with companies such as American Express, ABC, Reuters, and Business Week to build and create unique content. They invested heavily in specialized retention programs including online events and conferences, online promotions of upcoming event and new features, regular addition of new content, services, and software programs. AOL distinguish itself from Prodigy and CompuServe based on the content it provided to it users. 2. As of 1995, what are the key changes taking place in the commercial online industry? How are they likely to affect AOL’s future prospects? As of 1995, there were significant changes in the commercial online industry. MSN and Internet World Wide Web were entering the market with more attractive services for consumers. The online consumer services industry was expected to increase in very large numbers and as consumer demand increased, more content providers began to emerge and compete with AOL, Prodigy, and CompuServe. However, as the need for the content providers began to decrease as the Internet World Wide Web began to surface. Now everyone with a...
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