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YouTube may stream movie rentals

By Yinka Adegoke and Alexei Oreskovic
/ Source: Reuters

By Yinka Adegoke and Alexei Oreskovic

NEW YORK/SAN FRANCISCO (Reuters) - Online video site YouTube is in talks with several major movie studios about renting movies to users by streaming the movies over the Internet according to a person familiar with the talks on Wednesday.

It would mark the first time the world's most popular video site would charge its users to watch videos.

YouTube, which is owned by Internet search giant Google Inc, has held discussions with Lions Gate Entertainment Corp, Sony Pictures, a unit of Sony Corp, and Time Warner Inc's Warner Brothers about online movie rentals, the person said.

In many cases, the movies would be available for rental for a fee in a system similar to Web rental programs from Apple Inc's iTunes, Netflix and with newer movies. YouTube would likely charge a similar fee around $3.99 a rental.

YouTube, which is the world's No.1 video website, currently offers video for free, on an advertising-supported basis.

It currently has a range of archive movies, TV shows and promotional clips from the three named studios and other partners on its site.

"We hope to expand on both our great relationship with the movie studios and the selection and types of videos we offer our community," said YouTube spokesman Chris Dale.

YouTube is in the midst of talks and negotiations with a wide range of media content partners as it ramps up efforts to build a substantial library of current and archive professional movies and videos that it can monetize.

The site, best known as a place to seek out fun videos uploaded by users that feature themes such as skateboarding dogs and dancing babies, recently started to emphasize a growing amount of professional videos.

Advertisers are believed to favor professionally made videos over those of users. Hulu, a video site owned by News Corp, Walt Disney Co and NBC Universal, has had relative success attracting both users and advertisers with a range of full-length TV shows and older movies.

Last month, YouTube announced a partnership with Time Warner Inc properties including CNN and TNT. It agreed a similar deal in March with Walt Disney.

YouTube owner Google has come under growing criticism from Wall Street analysts and investors concerned the expense of serving millions of videos to users around the world everyday is costing the company more money than it earns from advertising.

(Reporting by Yinka Adegoke and Alexei Oreskovic; editing by Andre Grenon.)