(FORTUNE Magazine) – In the five years since Time Warner merged with AOL, executives at the media conglomerate (FORTUNE's parent) have viewed the online unit first as the crown jewel, then as a problem child, and more recently as a stable source of cash flow. Now CEO Richard Parsons is smiling on it once again, telling shareholders at an investors conference in September that AOL is the company's biggest growth opportunity.

That growth, of course, will not come from AOL's core narrowband business, which continues to shed subscribers at a rate even faster than expected. Rather, Parsons' hopes hinge on AOL's efforts to reinvent itself as a free Internet portal competing for ad revenue and eyeballs with the likes of Yahoo, MSN (rumored to be a potential partner), and Google. Sounds daunting when you consider that Yahoo and MSN have been at this for years, and Google has great technology. But analysts, advertisers, and users of AOL.com say it has one big edge: video.

The home page features video footage where its rivals typically display stock photos. In July, AOL.com won high marks for putting dozens of hours of Live 8 concert footage on the web. Now AOL has launched a web-only reality show about the music business. And it specifically designed the new site to give users easy access to video clips and highlights. For example, the portal automatically determines what kind of video player resides on a visitor's computer and launches clips in that format. It also has a nifty video search tool that allows users to scan additional clips in the same "box" that's playing a video--instead of having to go back to a home page.

Down the road, AOL.com could actually get a big boost from broadband--the very thing that's strangling its traditional dial-up business. AOL hasn't disclosed specific figures, but FORTUNE has learned that the new AOL.com in a recent month drew 18 million unique users--and an estimated 90% came via broadband connections, which optimize the video experience. If portals increasingly rely on "hits" such as the Live 8 concert to drive traffic, AOL may even have an edge over MSN and Yahoo. After all, it is part of a big media company with lots of expertise in producing movies and television. Wasn't that what the merger of Time Warner and AOL was all about in the first place? -- Stephanie N. Mehta