Internet company AOL Inc said on Monday it bought a video production company StudioNow Inc for $36.5 million in cash and stock to expand its technology to create original online programing.

AOL plans to fold StudioNow, which helps users create, store and manage online video, into its Seed.com, a similar service that manages a wide swath of programing from writing, to photography to video.

The Internet company, recently spun off from Time Warner Inc, is betting that original online video entertainment developed in-house will be as cheap and lure as many as viewers and advertisers as shows licensed from TV and Hollywood studios.

Yahoo and IAC/InteractiveCorp are each pursuing the same strategy.

AOL also said its chief technology officer Ted Cahall resigned and that it is seeking a replacement.

It also named Jeff Reynar head of technology for engineering and products in New York, where he will be in charge of AOL's new New York-based technology center.

Reynar co-founded DBT Labs, a social search service where he was CTO. Before DBT he spent four and a half years at search company Google.

(Reporting by Yinka Adegoke; Editing by Derek Caney)

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