"This process will not be advanced by threats. We seek instead engagement that is honest and grounded in mutual respect." Relations have been almost deep-frozen for decades, and remain blighted by differences over Irans nuclear programme, Iraq, Israel and other thorny issues.
In separate New Year messages to their nation, neither Supreme Leader Ayatollah Ali Khamenei nor President Mahmoud Ahmadinejad mentioned Obamas offer. Khamenei said world powers had been persuaded they could not block Irans nuclear progress. But Aliakbar Javanfekr, aide to Ahmadinejad, told Reuters: "The Iranian nation has shown that it can forget hasty behaviour but we are awaiting practical steps by the United States. "The Obama administration so far has just talked," he added, calling for "fundamental changes in his policy towards Iran".
The United States has no diplomatic relations with Tehran, which it accuses of backing militant groups and seeking to develop a nuclear bomb under cover of a civilian atomic power programme - a charge Iran denies. Javanfekr said Iran welcomed "the interest of the American government to settle differences". But he said the United States "should realise its previous mistakes and make an effort to amend them".
Washingtons sanctions against Tehran were "wrong and need to be reviewed". Its backing for Israel, Irans main enemy in the region, was "not a friendly gesture". The White House distributed the Obama video with Farsi subtitles and posted it on its website. It was not shown or mentioned on Irans main 2 pm state television news, but was reported by Iranian news agencies.
"MIXED MESSAGES" Mohammad Hassan Khani, assistant professor of international relations at Tehrans Imam Sadiq University, described it as a positive gesture but noted it came only a week after the extension of US economic sanctions.
"This is somehow conflicting and making people here confused," he said. Saeed Laylaz, editor of the Sarmayeh business daily, said Obamas move was significant but "it is not enough. They should have taken more brave steps towards better ties with Iran", such as easing the sanctions.
Obama has already expressed a readiness to have face-to-face diplomatic contacts with Tehran, a major shift from former President George W. Bushs policy of trying to isolate a country he once branded part of an "axis of evil". Obama said the United States wanted Iran to take its "rightful place in the community of nations", but also insisted that Tehran do its part to achieve reconciliation.