YouTube Takes On Netflix, iTunes and Amazon

CNBC.com

Youtube

Google's taking big steps to turn YouTube into a true entertainment destination, and to compete with Netflix, iTunes, Amazon and even Hulu.

Along with the rest of those giants, Google wants to distribute content to consumers, so it can cash in on advertising and now rental revenue as well.

YouTube will start renting 3,000 new movie titles, for up to $3.99, though most will cost $2.99. The video site has rented movies — and offered some for free — for some time now, but up until now the studio titles have been limited and older.

Monday's announcement marks a dramatic move into Hollywood blockbusters. Starting immediately YouTube's adding titles from NBC Universal, Sony, Warner Brothers, building the total number of titles available on YouTube to over 6,000. The company's been gradually convincing studios they should rent movies online the same day they're available on DVD.

Google sees a problem with the fact that people spend an average of just 15 minutes on YouTube each day and five hours watching TV. So, it's populating its movie rentals with behind-the-scenes movie extras and links to reviews, so its users don't click away to IMDB.comor Rotten Tomatoes.com.

YouTube is also investing more in original content — a topic that's been discussed broadly in the press over the past few months.

Now the company is owning up to the fact that it's actively looking to spend more on 'Partner Grants' and initiatives like its 'Creator Institute" and 'YouTube Next Up' to develop new talent and recruit more stars to produce content for the site. The company often points out that it's been shelling out partner grants since last June. But now YouTube is making the rounds at the Hollywood studios (though it won't comment on that) and it's clearly looking to take it's original content play to the next level.

Is it a threat to Netflix? Investors don't seem to think so. The stock is down by just a fraction of a percent after hours, but ended the day 3 percent higher. It'll take a huge range of movie options at low prices to pose a real threat to Netflix's flat-rate monthly fee for unlimited streaming.

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