YouTube sets sights on obtaining movie and TV shows, forges link with Hollywood studios

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Signaling a challenge to Hulu for Hollywood content, YouTube today is launching a new section on its site and a new advertising program tailored for full-length TV episodes and feature films.

The new section, dubbed “YouTube Shows,” will feature videos from the hugely popular website’s small but growing list of traditional media partners, which include CBS, Lionsgate, MGM, Starz and, in a new addition, Sony Pictures Entertainment.

The section is essentially designed to wall off Hollywood-produced content from YouTube’s hundreds of millions of viral videos. By providing a specialized experience that includes larger viewing windows, high-quality video and program-specific browsing, the Google-owned video site is hoping to attract more studios and networks.

So far, YouTube has a very small number of TV episodes and films compared with competitors such as Hulu, owned by NBC Universal and News Corp., CBS’s, and the networks’ own websites such as Drawing more of it is crucial to YouTube’s success, because such “premium” content draws significantly higher advertising rates than clips uploaded by the general public.

In addition, Google is launching an ad product called TV Ads Online through which it will sell video ads that can be inserted into television episodes or films that run on the Internet. Starting first on as a beta test, Google is hoping to eventually use it to insert 15- and 30-second ads into videos all across the Web, just as it currently does with text and banner ads.

Given Google’s struggles to make money from YouTube and the relatively small amount of revenue networks earn from streaming episodes on the Web versus airing them on TV, a more profitable advertising service will be extremely important to the future of online video.

-- Ben Fritz