Steve Case, a former marketing and brand manager at Procter and Gamble and Pizza Hut, helped to build a small online services company into one of the world’s largest single online service provider, America Online (AOL). At the peak of the market for high-technology stocks at the end of the 1990s, Case was able to parlay the high value of AOL stock into a friendly takeover of the then-largest media conglomerate, Time Warner, which was consummated in early 2001. Case expected AOL Time Warner to use its assets in online services, film, broadcasting, cable, publishing, and music to lead a trend toward technological convergence. In a speech to investors in 2001, Case claimed that AOL Time Warner would be well positioned to “build bridges to link technologies, to blur the lines between industries, . . . to drive a fundamental transformation of the media and communications industries.”

Case, a taciturn, reserved executive who prefers to operate behind the scenes, was nicknamed “The Wall” at AOL for his affectless, calm demeanor. However, despite his introversion, Case’s skills in identifying consumer interests and in developing the social and communicative aspects of online services helped to fuel the explosive growth of online services in the 1990s. In his early online experiences, Case had been excited but frustrated by technological difficulties and complexities. He then realized that “if you made [online services] easy to use, useful and fun, and affordable, someday it would become a mass market.” Case found his first opportunity in the computing industry when his older brother Dan invested in a small company named Control Video Corporation, which then recruited Steve in 1983 to help build its video game business. In 1985 Steve Case, along with partners Jim Kimsey and Marc Seriff, took over, renamed the company Quantum Computer Services, and started an online service named Q-Link for Commodore computer users. Seeking to expand, Quantum made deals with Apple Computer and Tandy, but when Apple opted out, Case reconfigured the company, renaming it America Online in 1989.

Named president of AOL in 1990, Case oversaw a marketing campaign that undercut the basic principles then prevalent in the software industry: instead of selling its software, AOL gave it away in order to sell its subscription service instead. Seeking to widen its market rapidly, AOL used direct mail, magazine inserts, and retail promotions to provide free AOL software to as many potential customers as possible. The free software provided an incentive to stay online by subscribing. AOL’s strategies for subscriber retention included convenience, user friendliness, and services such as e-mail, games, chat rooms, and messaging. AOL then also provided professionally produced content, organized in “channels” for ease of access, aiming for a hybrid form of magazine information and television entertainment that would appeal to new users. While other online services kept tight control over their subscribers’ communications by banning certain forms of speech, AOL encouraged an open, freewheeling, user-controlled communications environment. As Case formulated it, AOL had to develop the “three C’s” of “communication, community, and clarity” in order to personalize online experiences and build subscriber loyalty. Case said, “We wanted people to think they were members and not customers.” And by spending hours online interacting with subscribers himself, Case helped build a corporate image of AOL as accessible, friendly, and human. To many subscribers, investors, and employees, Steve Case was AOL personified.

By the time AOL sold stock in its first public offering in 1992, it had overtaken its competitors Prodigy and CompuServe. When the World Wide Web developed in the early 1990s, AOL was redesigned to allow Internet access from inside AOL. In 1996, after AOL switched from hourly pricing to a flat-rate subscription plan, AOL reversed its long-standing arrangements with outside professional content providers and began to charge them for access to AOL screen space (that is, AOL subscribers’ attention). AOL had discovered that most of its subscribers logged on not to read repurposed magazine articles but to communicate with other subscribers through e-mail, instant messaging, and chat room—services that subscribers could find only online, not in magazines or on television.

As AOL resisted friendly and unfriendly takeover attempts in the late 1990s, it used its highly valued stock to acquire businesses including Netscape, MovieFone, ICQ, Winamp, and CompuServe, and also expanded into Europe, Japan, and Latin America. Having proved that online services could appeal to a mass market by being user friendly, Case began to look for partners in building his vision of a converged media environment. Time Warner was an attractive candidate. Its subsidiaries Warner Bros. Television, Warner Bros. Animation, HBO Productions, Lorimar, and Telepicture Productions are major television producers, distributors, and syndicators of programs such as Friends, ER, The West Wing, The Drew Carey Show, and Gilmore Girls. In addition to its broadcast network, The WB, Time Warner controlled many top cable networks, including Home Box Office, Cinemax, and the Turner Networks (Cable News Network, Turner Network Television, Turner Broadcasting System, Cartoon Network, and Turner Classic Movies). Time Warner assets also included the film studios Warner Bros. (Harry Potter) and New Line (The Lord of the Rings); Time Warner trade book publishing (Little, Brown); Warner Music Group (Madonna, Britney Spears); and Time magazines (Time, People, Sports Illustrated). Time Warner had tried to break into the new-media world through online and interactive media and, as these attempts were perceived as failures, was receptive to Case’s overtures.

Case initiated merger talks with Time Warner in part because its cable operating systems, then the second largest in the United States, offered broadband access via cable modems, as well as addressable cable set-top boxes, and it was working on video-on-demand, interactive programming, home shopping, and streaming video and audio. In explaining his motivation for the merger, Case said, “Having assets in the Internet space, having assets in the television space, allows you to make a difference if, for instance, one of your goals is to re-invent television.” Having marketed online computing as a medium as easy to use as television, Case hoped to “re-invent” television as a medium as interactive as online computing.

However prescient Case’s vision of interactive media may prove to be, the first years after the merger of AOL and Time Warner were difficult. As AOL Time Warner’s stock price fell, in part because of the overall reevaluation of technology and communications companies, most of the major architects of the merger were forced out of the company. Case himself resigned as chairman of the board in 2003, his leadership contested by competing factions of the conglomerate. Although AOL Time Warner planned to build on the base of the millions of subscribers to its magazines, online services, and cable television to cross-promote broadband and interactive television services, as of this writing it has begun to divest some of its holdings, including AOL from its name. However, Case’s idea of building a “synergistic” conglomerate that builds its online, cable, and broadband distribution services by offering user-friendly technologies and popular content brands may still yet be realized. As Case has insisted, “convergence is the wave of the future . . . . [I]t isn’t science fiction, it’s already happening.”