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YouTube Inks Deal with Hollywood Studios; Launching ‘Movies on Demand Service’

Google inks deals with big movie studios to let users rent the latest releases on its YouTube the same day as they appear on iTunes.

YouTube will imminently launch a movie-on-demand service charging users to stream mainstream Hollywood movies off the world’s largest video sharing site, TheWrap has learned.

The new service means a full-bore challenge to Apple’s iTunes service — currently the most powerful player in paid video streaming — and a welcome new revenue stream for Hollywood as home entertainment revenues continue their steep decline.

The service may start as early as this week or next, and is expected to be announced soon by YouTube.

Google has managed to cut new content deals with Sony Pictures Entertainment, Warn Brothers and Universal.

Others like Fox, Paramount and Walt Disney, of which Steve Jobs is the largest individual shareholder, apparently declined to join the initiative at this stage.

The service is the biggest studio VOD deal since all the major studios signed on to Apple’s iTunes rental service in January 2008. Fox, Disney, Warner Bros., Paramount, Universal, Sony, MGM, Lionsgate and New Line were all on board for that initiative. Apple charged as low as $2.99 rental fee for that service.

It wasn’t clear what YouTube would charge. But it means the site’s 130 million monthly users will be able to pay to watch movies as they come out into the DVD market; it’s the first serious foray by the Google-owned company into mainstream movies and charging money for video.

YouTube issued a statement after this story was published, pointing out that it has rented movies for a year, while declining to comment on the broader initiative it’s about to launch with the major studios on board.

“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 spokesperson said. “Outside of that, we don’t comment on rumor or speculation.”

But in fact the video giant has never rented mainstream movies on this scale during the traditional DVD window. The major studios, who were once leery of YouTube, now see it as a potentially lucrative platform.

“We think it’ll start with VOD, but broaden to include sell-through over time,” said a senior executive at one Hollywood studio that has signed the deal with YouTube. “We’re pretty excited because we are happy to see new entrants come in transactionally rather than a subscription model.”

[Via: The Wrap]

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