Millions of people log-on to YouTube everyday to watch silly cat videos. Will those same people log-on to watch pay-per-view movies? This morning, the Financial Times reported that “Google’s YouTube video site is in negotiations with Hollywood’s leading movie studios to launch a global pay-per-view video service by the end of 2010.”

The service has been in beta testing since the beginning of the year and is said to have “caused excitement in Hollywood” where movie studios are struggling to come up with ways to replace dwindling revenues from DVD sales. Google’s movie rental product would compete directly with similar services from Netflix, Apple, Hulu and Amazon.com, among others.

When I wrote about YouTube’s movie rental plans last year, I was less than optimistic. Specifically, I wasn’t sure whether YouTube’s playback would be good enough to convince people to shell out five dollars per movie. On second thought, it occurred to me that I was talking about Google, and Google rarely puts out an inferior product.

Many users don’t realize it, but YouTube actually already has a Movies section on the website. The majority of the movies they have available are terrible (Baby Geniuses is probably the best one there, if that tells you anything), but the quality of the streaming quality is actually quite high. Assuming that’s the base level from which YouTube is working, I’d be willing to bet that the website’s eventual pay-per-view service will be more than capable of competing with the more established services.

I find it interesting that there are two seemingly divergent trends in Hollywood right now that actually have very similar end goals. On one hand, you have studios forcing directors to use 3D technology so that they can get people to leave their house and come out to the movie theater. On the other hand, you have studios brokering deals with companies to make sure that we have instant streaming access to movies in the comfort of our homes via our televisions, computers and gaming systems.

In both cases, Hollywood is looking to make the most money possible. It’s actually brilliant if you think about it. They know that there will always be people willing to go out to see a movie, but they’re hedging their bets by appealing to our innate laziness with the streaming technology.

We’ll have more on YouTube’s streaming movie rental service when it launches later this year.

Source: Financial Times

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