YouTube to Launch Paid VOD Service

Report says Google site has multiple Hollywood deals in place

iTunes and Netflix have some new competition in the movie-streaming race. On Monday, The Wrap reported that YouTube plans to launch a paid video-on-demand service. The service could start as early as this week or the next, and YouTube is expected to make an official announcement soon.

YouTube’s VOD service, which will offer movies as soon as they’re available to rent on DVD or through iTunes (and far ahead of Netflix), will be the company’s first foray into mainstream movies and charging for video, The Wrap said. There’s no word yet as to what YouTube will charge for content. (Apple charged as little as $2.99 for movie rentals when their service launched in 2008.)

YouTube has already convinced several major Hollywood studios—including Universal, Warner Bros., and Sony—and a handful of smaller, independent ones like Lionsgate to license their films. But Fox and Paramount have turned down any licensing agreement with YouTube, and Disney’s position is still unclear. An executive involved in the deal told The Wrap that YouTube is trying to finalize deals with all of the studios before it makes any announcement.

Despite studios’ past troubles with YouTube, some think that its new service could provide major relief for the struggling home-viewing industry. “We think it will start with VOD but broaden to include sell-through over time,” said one senior executive at a studio that signed a deal with YouTube. “We are pretty excited because we are happy to see new entrants come in transactionally rather than a subscription model.”

After The Wrap’s story was published, YouTube released a statement pointing out the fact that they have been renting movies for a year (which were never mainstream movies released within the usual DVD window) but didn't go into specifics about any new venture.

@adweekemma Emma Bazilian is Adweek's features editor.