Youtube videos are extremely popular but guess what? Youtube will no longer serve videos (only). It has also entered the movie rental business. Google’s money-losing but the very popular Youtube service has started to offer movies since January 20, 2010. The free video sharing site is offering 5 films from Sundance Film Festival to people using their Google Checkout accounts. Viewers can now rent 2009 and 2010 Sundance Festival’ favorites movies such as Bass Ackwards, Children of Invention, Homewrecker, One Too Many Mornings, and The Cove. Customers can rent these movies for whatever price and time period the film-owner decides. Youtube itself isn’t setting the price and video rental validity period. For example, The Cove and One Too Many Mornings are both charging $4.00. But One Too Many Mornings is offered for 72 hours viewing while The Cove is only available for 24 hours. Youtube videos for rent are also ready for immediate playback once you paid the rental fee. This is comparable with Netflix (see release date for Nintendo Wii in the linked article) and Amazon’s movie rental business.
Paid video content is a big departure from Google’s early tactics of relying on pure advertising revenues to generate income for Youtube. While Youtube gets more than 1 billion page hits everyday from people around the world, well-informed insiders says Google is losing hundreds of millions of dollars on it. The advertising revenues were far from enough to cover the hardware and bandwidth costs of servicing billions of Youtube users. Analysts say Google’s top honchos have decided to experiment with paid video content service in the hope of improving Youtube’s balance sheet. The initial five independent films is just a start. The online advertisement giant is already in serious negotiations with film studios for lucrative distribution deal on Youtube’s platform. No major announcement has been made if Hollywood films and direct-to-DVD movies are going to be available soon on Youtube.
What has been confirmed is that videos and films from the educational and health sectors are soon to follow. Youtube has already confirmed that other independent films will be offered in the next followings weeks. Youtube is a massive hit with billions of users around the world and film producers cannot ignore the possibility that some of these users might just rent their film. Google is offering big movie studios and independent film makers a considerable channel for them to monetize their works. Experts are saying that Netflix and Amazon should be worried; Youtube is a tremendous competitor in-the-making. Online video rental is proving to be a lucrative billion-dollar business. Google wants a big chunk of this market and Youtube is perfectly positioned to threaten Netflix’s market leadership.