YouTube Explores Offering Pay Movies. Check Mate, Netflix. 6

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Both the New York Times and Wall Street Journal are reporting today that Google Inc.’s YouTube is negotiating with several major Hollywood movie studios to begin offering users access to full-length films on the website (for a small fee, of course).

The average consumer visits YouTube to surf free video clips or upload personal videos to share with family and friends. If you could also utilize the site to stream newly released movies, why wouldn’t you?

Both YouTube and several Hollywood studio giants are banking that you will.

For YouTube itself, these kinds of partnerships represent a chance to move out of the red and head down the path toward profitability. The New York Times reports, “. . . much of YouTube’s audience visits the site to watch a random mix of clips generated by amateurs, which advertisers view with trepidation. As a result, YouTube has been on a long quest to obtain more professionally produced video that it can use to generate revenue and offset the enormous cost of streaming billions of free clips.”

For the movie studios, a deal with YouTube means a much wider, global audience for their films, which is critical as the sale of DVDs continue to plummet. The Wall Street Journal agrees, “Though many studios now sell and rent movies online through services such as iTunes and, that has yet to produce meaningful revenue. By cutting a deal with YouTube, which had nearly 428 million global visitors in June, according to comScore, it can potentially reach a much wider audience.”

While both YouTube and the proposed Hollywood studio partners stand to gain substantially if this deal gets the green light, other entertainments outlets such as Netflix, will need a new game plan to keep up.

Currently, Netflix has adapted to the changing media landscape by offering streaming video to its customers in addition to shipping the hard copy DVDs. As the demand for streaming video continues, will a site with only that one function be able to stand its ground?

If you are a Netflix subscriber, would you cancel your membership when videos become available for purchase on YouTube?

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