YouTube’s move into content that people might pay for—instead of click on enough to make advertisers happy—is inching toward the next step: joining the online rental movies crowd. The Wall Street Journal is reporting, and paidContent has confirmed, that discussions are underway with Lionsgate, Warner Bros. and Sony (NYSE: SNE) to stream movies on the Google (NSDQ: GOOG) video site. Sources familiar with the situation say nothing is imminent but the timeline would be the “not-too-distant” future. The fee would be competitive, probably would be around $4 for newer releases, although the WSJ‘s talk of a 70 percent rev share for the studios with a $3 minimum guarantee per download may not be how it ends up. That’s one of the points still in discussion.
YouTube upgraded and expanded its approach to movies in April, creating a showcase environment for library films from Sony’s Pictures (through Crackle using its own player), MGM and Lionsgate. This would expand YouTube’s horizons from competing with Hulu for movies that have reached the ad-supported stage to competing with Amazon (NSDQ: AMZN), iTunes and Netflix (NSDQ: NFLX), among others, for new-release rentals.
According to the Journal, a three-month trial with 10,000 Google employees was supposed to start this month but has been pushed back as negotiations continue with the studios. That would have put a full-scale back to the end of Q4 at the earliest; at this pace, we could be talking about early next year but YouTube and the studios could agree to shorten the trial.
YouTube’s statement: “While we don’t comment on rumor or speculation, we hope to expand on both our great relationship with movie studios and on the selection and types of videos we offer our community.”
Update: Earlier today MediaMemo suggested that former William Morris head Jim Wiatt may sign on with Google as a YouTube consultant. Connected or coincidence? Probably a little of both. The idea of Wiatt working with Google dates back several years, about as long as his friendship with Google CEO Eric Schmidt. Bringing him on even as a consultant may have been a problem while Wiatt was still connected with the agency following its merger with Endeavor but that obstacle’s gone. More important, what could Wiatt do for Google? He has relationships with the key Hollywood players (real ones, not just the Rolodex kind) and he is skilled at smoothing roiled waters. But if Wiatt’s involved, you’re talking about going to the top, not managing biz dev discussions about crossing the t’s. For more on Wiatt, see this
By Staci D. Kramer