Since buying YouTube for $1.65 billion in 2006, Google has tried many different ways to turn a profit from the video sharing website. Despite being one of the most visited websites on the Internet and enjoying a userbase that can spend literally hours on its website, watching a reported 10 billion videos in 2009, YouTube has still proved a drain on Google’s limitless resources.
The high bandwidth costs of YouTube are one of its main costs.
Google has now come up with another way that it hopes YouTube will begin to make money, and it’s bad news for companies such as Blockbuster. Yesterday Google launched a new service whereby Internet users in the USA could pay to rent movies from YouTube, watching them online. The service only includes five films from the Sundance Film Festival, but if the trial is successful we could see YouTube offering the latest blockbusters online, which is bad news for Blockbuster.
The owners of the films, the studios, will be able to decide what price they want their movies to rented for – and YouTube’s users will then have 48 hours to watch the movies. It works similar to Sky Movies on demand service.
YouTube would then take a cut of the rental price, which could spell huge profits for Google.
Ben Fritz, a writer with the Los Angeles Times, wrote how Google has struggled in the past in persuading the big studios to release their latest movies (such as Transformers 2 and Star Trek) to YouTube:
YouTube has had little luck over the last several years wooing major studios and networks to stream premium content on the site, which would make it easier to draw advertising.
Most studios have instead opted to put their content on Hulu, a joint venture of NBC Universal, News Corp and Walt Disney that has had more success luring marketers.
Should YouTube be successful with its rental business, it would provide competition for Amazon’s download service and Apple’s iTunes store. Microsoft’s Xbox Live would also suffer, and we all know how much pleasure that will give the boys at Google.