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YouTube may stream movies on rental basis: WSJ
By John Letzing, MarketWatch
Last Update: 5:24 PM ET Sep 2, 2009
SAN FRANCISCO (MarketWatch) -- Google Inc.'s YouTube video service may begin enabling users to stream newer movies on a rental basis, marking its first foray into charging for content, according to a media report Wednesday.
Google GOOG is in talks with a number of studios to make newer releases available on YouTube for a rental fee, The Wall Street Journal reported in its online edition.
Studios reportedly talking to YouTube about the arrangement include Lions Gate Entertainment Corp. LGF, Sony Corp. SNE and Warner Bros. TWX.
A spokesman for YouTube said only that, "While we don't comment on rumor or speculation, we are always working to expand on both our great relationship with movie studios and the selection and types of videos we offer our community."
Charging for content such as movies would mark a significant shift for YouTube, which has gained massive popularity by offering free access to short video clips.
Late last year, the video service made a significant move into full-length TV programming, thanks to a partnership signed with CBS Corp. CBS YouTube has also added full-length movies, though they largely consist of older, less-popular titles. Such content is exclusively advertising-sponsored.
According to the Journal report, YouTube would most likely charge about $3.99 to rent a newer movie, on par with the price of new movie rentals at Apple Inc.'s AAPL iTunes store.
YouTube would likely give studios roughly 70% of the revenue earned through the rental arrangement, according to the report.
Google acquired YouTube for $1.65 billion in 2006, and has struggled to turn the popular video service into a profitable business. YouTube has also attracted copyright litigation, most notably a $1 billion lawsuit filed by Viacom Inc. VIA
Meanwhile newer rivals have surfaced, including Hulu LLC, a joint venture between NBC Universal GE, News Corp. NWS and Disney DIS that is able to offer free access to full-length films and TV shows.
MarketWatch, the publisher of this report, is a News Corp. property.
In addition to Apple, other companies that offer streaming movies on a rental basis include Netflix Inc. NFLX and Amazon.com Inc. AMZN
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