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Disney-YouTube Strike Deal for Movie Rentals

Disney and YouTube
Disney and YouTube

Consumers just got yet another option for entertaining their kids with Disney movies.

Disney just agreed to rent its movies on YouTube -- it will offer hundreds of films from Disney, Pixar, and DreamWorks Studios on YouTube starting today for between $1.99 and $3.99. Disney will receive the majority of revenue.

This makes YouTube a real contender in the video-on-demand space, building its reputation as a destination for premium professional content, and not just silly pet videos. Disney joins Sony Pictures, Universal, and Warner Brothers, which started renting movies on YouTube back in May. Now YouTube has "thousands" of movie titles for rent.

YouTube is still missing Paramount and 20th Century Fox films, which its rivals have, but this shows that YouTube will invest in content to pose a real competitive threat to Apple's iTunes, Amazon , and even the video-on-demand options from cable and satellite TV providers like Comcast and DirecTV. Users will be able to access these movies both online and on their TV sets via the YouTube app on Google TV .

This is Disney's third deal with YouTube: Back in 2009 Disney started offing clips on YouTube. Then earlier this month Disney announced that its Interactive arm would create original programming to distribute as part of YouTube's 'channels.' And Disney's YouTube 'channel,' will also include full-length TV episodes from Disney Channel. But this deal is by far the most significant-- and poses the most direct threat to Apple. The fact that Steve Jobs was Disney's largest shareholder raises questions about the timing. Would this deal with Apple's rival *not* have happened if Jobs were still alive? On the other hand, Disney has certainly taken an approach of wanting to offer its content on as many platforms as possible. Either way, it speaks to the fact that video distribution is being commoditized: it's not just for cable companies.

Everyone wants to sell consumers content.

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  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.