YouTube, movie studios in talks on streaming content for fee

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Google Inc.’s YouTube may become the next window in the Hollywood distribution chain.

The video-sharing site is in early talks with Warner Bros., Sony Pictures and Lionsgate about streaming movies online to its users for a rental fee, people close to the discussions say.

This is a major shift in strategy by some of the major Hollywood studios, which have been wary of showcasing their new movies online out of concern that it could hurt the value of their DVDs. But now that the DVD business is cratering, a new school of thought is emerging that the Internet will become a friend rather than a foe.

There are still hurdles to overcome, including pricing and the timing of when movies would be put on YouTube. Warner Bros. already releases movies on DVD and on video-on-demand at the same time so adding YouTube to the mix probably won’t be a big deal. But other studios still have separate windows for DVD and VOD releases, so figuring out whether YouTube would become its own window or part of the VOD window would need to be resolved.

Pricing would be similar to VOD and iTunes, which is about $3.99 per movie and the split would 70% for the studio and 30% for YouTube. The talks were first reported by The Wall Street Journal. The service may being to undergo internal testing at Google in the next several weeks.

-- Joe Flint