WSJ reports that YouTube is in talks with movie studios to offer streaming of rental movies.
Google Inc.’s YouTube is in discussions with major movie studios about allowing users to stream movies on a rental basis, according to people familiar with the company’s plans, marking one of the video giant’s first moves towards charging for content instead of making it available for free with advertising.
While some studios already make full-length movies available on YouTube, they tend to be older, lesser-known titles. Now YouTube is talking to Lions Gate Entertainment Corp., Sony Corp. and Warner Bros. about integrating newer titles into the existing YouTube site, most of which it would carry a rental charge. In some cases, these titles might be available on the site on the same day that they come out on DVD. It is unclear to what extent older movies or television shows will be part of the new agreements.
While details vary from studio to studio, generally speaking the agreements would allow consumers to stream movies on a rental basis for a fee. However, in some cases, the movies would be available in way that they have been previously—free, with advertising.
Negotiations are continuing and there are no guarantees a deal will be struck. Many details remain in flux, including whether users will also eventually be able to download movies. People familiar with the matter say that new movie rentals are likely to be around $3.99, the price Apple Inc.’s iTunes charges for new movie rentals. The companies hope to keep pricing on par with what consumers pay for video-on-demand for new titles, these people say.
YouTube generally gives studios about 70% of revenue for ad-supported content they already offer on the site, people familiar with the matter say. They would likely get a similar percentage for new movies. But they would also likely be guaranteed a minimum fee of just under $3 per title viewed. That ensures the studio the dollar amount, even if YouTube decides to run a special where they charge consumers less.
If the YouTube deals come to fruition, the site would join Apple, Amazon.com Inc. and Netflix Inc. in offering services that allow users to stream or download newer movies online. Sony’s Crackle and Hulu LLC allow users to watch full-length movies for free, but don’t generally include new releases.
Youtube clearly identifies professional content as the way to profitability. They seem to have identified Netflix business as a target. I think Youtube has a branding problem if it wants to compete with Netflix and Hulu. They need to create a separate brand that doesn’t say user uploaded videos.