Very interesting: Majors talking VOD with YouTube

Posted in DVD, Lionsgate, Netflix, paidContent, Redbox, Sony, VOD, Warner, WSJ, YouTube by Diane on September 2, 2009

The WSJ is reporting, and paidContent confirms, that several studios are in talks with YouTube to stream movie rentals — aka Internet VOD — via the video sharing giant. This is interesting on a number of levels:

1. For starters, it’s a reminder how much studios prefer VOD to traditional disc rentals. The reason is simple: they get a cut from each transaction. According to the WSJ, studios would likely get a guaranteed minimum fee of just under $3 per title viewed. (The transaction fee is expected to mirror Apple’s iTunes rental fee of $3.99 on latest hits.)

2. It’s another way for studios to compete against Redbox. It’s killing studios that Redbox is making a bundle on $1 rental transactions while DVD sales slump. Consumers are clearly eager to rent, not always buy, movies. YouTube would join services such as Apple’s iTunes and Amazon.

3.  The movies themselves would be available according to VOD windows, which vary by studio and sometimes by popularity of title. Warners, for example, is wont to collapse that window to boost VOD. The studio has been a strong proponent of VOD for some time; for a long time it had a vested interest in Time Warner cable; that division was spun off earlier this year.

The other participants, Lionsgate and Sony, are also bullish on Internet VOD. Lionsgate owned CinemaNow for a long spell and Sony operates Crackle. They have also, as paidContent notes, previously done streaming deals with YouTube for older content. Those were ad-supported.

4. Netflix also streams movies, but under a separate later window for subscription services.

5. Sony and Lionsgate recently made deals with Redbox, having decided it’s best to draw from as many revenue streams as possible, but Warner, however, is trying to hold Redbox to a later window.

When might such a deal commence? Prolly not until late in the fourth quarter or early next year, paidContent says. This timeline makes sense. Studios want people to buy movies during the holiday shopping season, not rent them. The Apple deal was unveiled in early January 2008; by that point, all the majors were on board.


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