Google has moved to bolster the appeal of its YouTube video site by striking deals with several Hollywood movie studios to make their films available to rent online in the US. The deals with companies including Warner Brothers, NBC Universal and Sony Pictures Entertainment will add 3,000 titles to YouTube’s movie rental service.
The site has offered free movies alongside user generated content for the past two years but its move into newer titles aims to capitalise on the gradual shift of viewers online.
Salar Kamangar, head of YouTube, wrote in a blog that viewers were spending an average of 15 minutes a day watching YouTube, compared with five hours watching television. “As the lines between online and offline continue to blur, we think that’s going to change,” he said.
Hollywood has become more willing to strike deals with operators following the collapse in DVD sales, once the industry’s most profitable revenue stream.
The Digital Entertainment Group, which represents studios and consumer electronics groups, published figures last week showing a near 20 per cent annual decline of packaged media sales in the US, including DVDs and Blu-ray discs.
The deals between the studios and YouTube will add older titles such as Goodfellas and Scarface to newer films including Inception, The Green Hornet and Despicable Me.
YouTube has been deepening its ties with Hollywood for several months, hiring a team of new executives with film industry experience. Last year it hired Robert Kyncl, a former Netflix executive, as well as Alex Carlos and Malik Ducard, two former executives with Paramount Pictures’ digital unit.
The new team has been courting talent agencies, outlining plans to create a network of channels based around specific themes or niches, such as fashion, food and video games.
YouTube’s Hollywood plans come as other online operators with different business models have emerged as competitors.
Netflix, the film and television subscription service, has amassed 24m paying subscribers and plans to expand internationally, first in Latin America. It is aggressively buying streaming rights to films and TV shows and recently struck a deal to buy exclusive rights to the US remake of the BBC hit House of Cards.
For YouTube, the Hollywood content will help deepen user engagement. The company generated revenues of $825m in 2010 and is forecast to generate $1.3bn in 2011, according to research by Mark Mahaney, an analyst with Citigroup.