YouTube: The Next Big Movie Distributor?

The Wall St. Journal today reports that Google's YouTube is in talks with the major motion picture houses to distribute movies. But YouTube's model would likely vary from the pay models that Apple's iTunes and Amazon use.

"YouTube is talking to Lions Gate Entertainment Corp., Sony Corp., Metro-Goldwyn-Mayer Inc. and Time Warner Inc.'s Warner Bros. about charging for new titles on the existing YouTube site. In some cases, these titles might be available on the site on the same day that they come out on DVD."

While discussions are being held to use the normal pay model of distribution, something much more interesting is also in the works. YouTUbe is interested in offering free movies to consumers, but with advertising.

"While details vary from studio to studio, generally speaking the agreements would allow consumers to stream movies on a rental basis for a fee. However, in some cases, the movies could be available in way that they have been previously -- free, with advertising."

Hulu currently offers a limited number of first-rate feature length movies using traditional TV-like advertising. No deals have been finalized with YouTUbe nor did the Journal mention how the advertising would be done ( like Hulu's or with the current YouTube pop up lower bar or something totally different).

YouTube has traditionally hosted free movies so the prospect of having users pay for their content might be a foreign one. They'll likely try to use Google Checkout for such endeavors which hasn't gained traction in the marketplace. The ill-fated Google Video, which was on a death march the minute Google bought YouTube, was experimenting with this model for a short time.

On the flip side, DVD houses and digital distribution channels like iTunes and Amazon might not want to have to compete with free commercialized versions of the media they are trying to distribute for a fee.

It feels like this business will play out like the traditional movie marketing did. Movies hit theaters, then Pay-per-view (HBO vs. iTunes), then TV with commercials (NBC vs. YouTUbe). There isn't any reson to think it won't.

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