Word is going around that YouTube is in talks with some of the major studios for possible distribution of films through the online site for a fee. To come out as “rental”, it might charge around $3.99, the same amount iTunes charges for its movies, for movies that will be streamed.
Hollywood has also been eager to distribute more of its films online — as long as it can collect a reasonable fee. Though many studios now sell and rent movies online through services such as iTunes and Amazon.com, that has yet to produce meaningful revenue. By cutting a deal with YouTube, which had nearly 428 million global visitors in June, according to comScore, it can potentially reach a much wider audience.
Studios have been pursuing these kinds of deals with renewed urgency, as revenue from DVD sales has eroded more quickly than they had anticipated. Adams Media Research says studio revenue from DVD sales should fall by about $850 million this year to $12.9 billion.
The only question is, would people pay for the service? This sounds like a good business idea, but I’m not sure it beats Netflix’s cheaper service that not only has a wide selection of films but also charges no penalty for customers holding titles with them for a long time. Plus, as long as the problem of piracy is rampant, particularly outside of the US, how much YouTube can cash in on this kind of service remains in question.