YouTube Expanding On-Demand Movie Service with Mainstream Hollywood Titles

According to a report from the Hollywood-tracking news outlet The Wrap, Google’s YouTube will soon be expanding its on-demand movie rental service to include mainstream Holloywood films. Major movie studios including Sony Pictures Entertainment, Warner Brothers and Universal are all said to be on board, as are a number of independent studios.

The sources cited by The Wrap are “movie executives with knowledge of the deals,” but YouTube itself said it would not comment on rumor and speculation.

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An Expanded Store

A YouTube spokesperson would only say this, when asked about the on-demand streaming service:

“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.”

The spokesperson is referring to YouTube’s store, available here at: http://www.youtube.com/store. The service launched last year, offering movie rentals for $2 or $3 dollars apiece. The files are available for streaming, not download, similar to the videos provided by Netflix or Hulu’s streaming services.

Currently, there are only a small number of well-known titles in the YouTube Store. These are prominently featured on the site’s homepage, making the service appear more well-stocked than it actually is. But dig a little deeper and you won’t find much more to choose from, unless you like really B-to-D grade films and direct-to-video offerings.

Launching in Weeks

The upcoming deal, which has now been confirmed by AllThingsD’s Peter Kafka as well, would change that. He adds that while Sharon Waxman’s report from The Wrap pinned the launch date as being “as early as next week or next,” he heard that the time frame was “weeks, but not months.”

Those not participating in the current deal, Kaftka notes, are New’s Corp.’s Fox and Paramount, whose corporate parent Viacom is still suing Google regarding YouTube copyright issues and claims.

Cloud Locker Planned

Kafka also cited one source who said that this on-demand movie rental service was just the beginning for Google’s vision. In the future, Google wants users to be able to purchase movies and store them in an online cloud locker, a service that sounds strikingly familiar to the one Amazon itself just launched.

But even if the service does launch as expected, the question many in the media are now asking is whether or not the business model is viable. Netflix, which offers streaming movies, not rentals and purchases, is booming, having nearly doubled its net quarterly profits from last year. It also added 3.3 million subscribers in Q1 2011. Would streaming individual rentals and purchases attract a large enough audience to make the expanded YouTube service a success? Or will consumers still choose Netflix instead?

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