Hoping to get in on the action that has made Netflix such a massive success, YouTube has secured deals with Warner Bros., Sony, Universal, Lionsgate and the Weinstein Co. to offer more films for streaming online the same day they become available on DVD and Blu-ray.
YouTube began renting films last year, but its offerings have largely been older films that Variety refers to as "library fare." The site's video-on-demand service has offered rentals for between $2 and $4 per film, numbers similar to those charged by rival VOD services like iTunes and Best Buy's CinemaNow. Whether YouTube will offer a monthly subscription streaming service in the manner of Netflix and Hulu Plus remains unclear.
Film studios have largely avoided exclusivity deals with digital distributors, believing instead that releasing a film to multiple online rental services simultaneously is more profitable. Adding YouTube, with its 130 million unique visitors per month in the U.S. and 2 billion video views per day worldwide, to their arsenal of rental services seems a wise move as studios look to combat dwindling DVD sales.
However, The New York Times reports that even with these new deals in place, YouTube still only has half of the industry's top studios on board. Walt Disney, which has close ties to Apple and its iTunes rental service, 20th Century Fox and Paramount have yet to reach an agreement with the video-streaming service. When it comes to Paramount, things remain tricky for the Google-owned company, as it continues to be involved in a $1 billion copyright infringement lawsuit with Viacom, Paramount's corporate owner.
Last year, a federal judge in New York sided with YouTube and dismissed Viacom's case; Viacom is appealing the ruling.
Between them, Disney, Fox and Paramount account for 60 percent of the North American film market.
"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," a YouTube spokesman said in a statement. While the company did not comment on when the deals would take affect, experts anticipate new films will begin showing up on the website sometime in May.
Google appears to be looking to the success of Netflix with its decision to use a VOD rental system to turn YouTube into a major revenue generator. Netflix tripled its value in 2010, giving it a market value of $13 billion (more than many of the studios whose films and TV shows it distributes). In the first quarter of 2011, the video-streaming service reportedly signed up nearly 3.7 million new users, bringing its total number of subscribers to over 23.7 million.