However, consumer interest in paying to watch the limited selection of movies on YouTube thus far has been very low, according to a person with knowledge of the situation. And one analyst said the greatest hurdle in creating a viable rival to Apple's iTunes or Amazon's Instant Video service is persuading YouTube's 143 million monthly users to think of the site as a place to watch something other than short, quirky videos.
"The biggest challenge they face is a brand perception challenge," said Paul Verna, a senior analyst with EMarketer. "They are so synonymous with user-generated content. ... How do you turn a ship that is so big and has so much momentum in one direction?"
YouTube's expanded on-demand service would make the movies available to stream online for a limited rental period. Consumers won't be able to purchase films and download them on a permanent basis under the current plans. The site has also allocated $100 million to underwrite the cost of original programming, which would be organized into television-like channels, according to people briefed on the matter who asked not to be identified because talks are continuing.
Google's dominant online video service has been in talks with Hollywood executives for more than a year. Studio executives hope YouTube's vast online audience can be enticed to rent newly released films - especially since YouTube's video can be watched on countless portable devices. The studios are eager to bolster digital revenue to help offset declines in DVD sales and perhaps one day to use YouTube as a platform to sell digital versions of movies.
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(Ben Fritz of the Los Angeles Times contributed to this report.)
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(c) 2011, Los Angeles Times.
Visit the Los Angeles Times on the Internet at http://www.latimes.com/.
Distributed by McClatchy-Tribune Information Services.
By Dawn C. Chmielewski
Los Angeles Times
(MCT)
LOS ANGELES - Google Inc.'s YouTube is ramping up its video-on-demand movie rental service with thousands of titles from several major Hollywood studios in a bid to compete head-on with established services offered by Apple Inc.'s iTunes and Amazon.com Inc.
YouTube has reached agreements with Sony Pictures Entertainment, Warner Bros. and Universal Pictures to offer their movies on the same day the films are available on other on-demand services, according to several people with knowledge of the situation who requested anonymity because the negotiations are confidential.
Other studios, including Paramount Pictures, 20th Century Fox and Walt Disney Studios, have declined to join YouTube because of concerns that Google has not done enough to deter online piracy, said people familiar with the matter, also citing the confidential nature of the discussions.
Paramount's corporate parent, Viacom Inc., is currently embroiled in a copyright infringement suit against YouTube.
Securing more sought-after Hollywood films may help stimulate demand for another high-profile corporate initiative - Google's struggling television service. Google TV delivers online video, including YouTube's content, to the living room TV screen via the Internet.
"This is the battle for the third screen," said Colin Gillis, an analyst for BGC Financial. "Right now, people watch (YouTube) on their desktop or on their mobile, and it's all short-form content. As part of the re-launch of Google TV, you've got to get people thinking (of YouTube) as more long form."
A YouTube spokesman issued a statement saying, "We've steadily been adding more and more titles since launching movies for rent on YouTube over a year ago and now have thousands of titles available. Outside of that, we don't comment on rumor or speculation."
YouTube, which rose to prominence on the popularity of user-created videos, has been looking to bolster its bottom line with more professionally created content. The site began making movies from the Sundance Film Festival available for online rental early last year. It now offers a limited selection of pictures to rent via the service, including Weinstein Co.'s animated film "Hoodwinked" and MGM's "Hannibal Rising." Other films, such as director Ivan Reitman's 1984 comedy "Ghostbusters" and Morgan Spurlock's 2004 fast-food documentary "Super Size Me," can be watched free with commercials.
However, consumer interest in paying to watch the limited selection of movies on YouTube thus far has been very low, according to a person with knowledge of the situation. And one analyst said the greatest hurdle in creating a viable rival to Apple's iTunes or Amazon's Instant Video service is persuading YouTube's 143 million monthly users to think of the site as a place to watch something other than short, quirky videos.
"The biggest challenge they face is a brand perception challenge," said Paul Verna, a senior analyst with EMarketer. "They are so synonymous with user-generated content. ... How do you turn a ship that is so big and has so much momentum in one direction?"
YouTube's expanded on-demand service would make the movies available to stream online for a limited rental period. Consumers won't be able to purchase films and download them on a permanent basis under the current plans. The site has also allocated $100 million to underwrite the cost of original programming, which would be organized into television-like channels, according to people briefed on the matter who asked not to be identified because talks are continuing.
Google's dominant online video service has been in talks with Hollywood executives for more than a year. Studio executives hope YouTube's vast online audience can be enticed to rent newly released films - especially since YouTube's video can be watched on countless portable devices. The studios are eager to bolster digital revenue to help offset declines in DVD sales and perhaps one day to use YouTube as a platform to sell digital versions of movies.
___
(Ben Fritz of the Los Angeles Times contributed to this report.)
___
(c) 2011, Los Angeles Times.
Visit the Los Angeles Times on the Internet at http://www.latimes.com/.
Distributed by McClatchy-Tribune Information Services.
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