San Francisco — With the growing advertising revenue giving YouTube a new life to profitability, the massively popular Google Inc.’s video streaming service is not yet there, hence, YouTube is reportedly negotiating a deal with several Hollywood studios to rent new release movies online, a move that would push the free video-sharing site charging for content for the first time, The Wall Street Journal reported last week.
Streaming movies are basically as such that there is no need for the user to download the file and the content over the Internet which is displayed in real time. This is the the first time the world’s msot favorite video-sharing site would charge its users to watch videos.
The newspaper, citing “people familiar with the company’s discussion,” said Google-owned YouTube is in discussion with major movie studios including Lions Gate Entertainment Corp., Sony Pictures, a unit of Sony Corp., and Time Warner Inc.’s Warner Brothers about integrating newer titles for rental. In some cases, these titles might be available on the site on the same day they come out on DVD.
“Google’s YouTube is in discussions with major movie studios for streaming movies on a rental basis, a test of whether the online video giant can persuade millions of users to pay for premium content,” The Wall Street Journal said.
“Negotiations are going forward and there are no guarantees a deal will be struck,” the newspaper said.
YouTube, acknowledged mainly for its user-contributed amateur videos, already made deals with some studios to screen clips and full-length movies but so far does not charge for anything on the site.
For Hollywood, the move could be a blessing in disguise — a bold attempt to offset its dwindling DVD sales with online revenue.
The move comes as Apple’s iTunes and others made similar deals.
YouTube is carrying out a large number of discussions and negotiations with media content partners as it intensifies efforts to build a substantial library of current and archive professional movies and videos that it can monetize.
The site is a popular place to discover fun videos uploaded by users on topics such as skateboarding dogs and dancing babies, recently began to show a growing amount of professional videos.
YouTube, which had nearly 428 million global visitors in June, as per comScore, can potentially reach a much wider audience.
YouTube also recently signed a deal with US media and entertainment giant Time Warner to display clips from Time Warner property Warner Bros. with both the parties splitting advertising revenue between them.
A final agreement would depend on pricing and an agreed-upon release date, said the people, who spoke on condition of anonymity because discussions were still ongoing.
The new movie rentals are likely to be around USD 3.99, the price Apple Inc.’s iTunes Store charges for new movie rentals. The move distanced YouTube away from an ad-supported business model, but does not break the mold of other online rental deals already struck by iTunes, Amazon.com and Cinemanow.com, a unit of Sonic Solutions. The companies hope to keep pricing on par with what consumers pay for video on demand for new titles, the report said citing these people.
Quoting a YouTube spokesman the WSJ said, the company is always working to expand on “its great relationships with movie studios and on the selection and types of videos we offer our community.”
The Internet site declined to comment specifically on the talks.
“While we do not comment on rumor or speculation, we hope to expand on both our great relationship with movie studios and on the selection and types of videos we offer our community,” said YouTube spokesperson Chris Dale.
Every studio would likely agree to different terms, but most would receive around 60 percent of the revenue from each rental, with a floor of about $2.40 that could vary depending on the age of the title, the person said.
The “window” — or the time lapse between the sales date of DVDs and their rental, which is meant to protect sagging DVD sales — could be 30 days or more.
Advertisers are considered to favor professionally made videos over those of users. Hulu, a video site owned by News Corp, Walt Disney Co and NBC Universal, has had relative success attracting both users and advertisers with a range of full-length TV shows and older movies.
Last month, YouTube announced a partnership with Time Warner Inc properties including CNN and TNT. It agreed a similar deal in March with Walt Disney.
YouTube owner Google has come under growing criticism from Wall Street analysts and investors concerned the expense of serving millions of videos to users around the world everyday is costing the company more money than it earns from advertising.
If the discussions between YouTube and major Hollywood studios yield results, viewers for a fee might be able to stream hit movies, perhaps as soon as they are out on DVD.
The talks were first reported on The Wall Street Journal’s Web site last week.