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YouTube poised to expand movie offerings in bid to challenge Apple, Amazon

April 26, 2011 |  1:22 pm

Google Inc.'s YouTube is poised to dramatically expand its on-demand movie rental service with films from several major Hollywood studios, a move that would position the online video giant to compete directly with Apple's iTunes and Amazon.com.

YouTube has reached agreement to offer movies from Sony Pictures Entertainment and Universal Pictures on the same day the movies are available on other on-demand services (often that's when the DVD is released), according to several people with knowledge of the situation. Warner Bros. also has agreed to participate, according to the Wrap, which first reported the YouTube deal.

Lionsgate already rents certain titles from its library through YouTube and is expected to soon offer newer films as well, according to a person familiar with the situation.

Other studios, including Paramount Pictures, 20th Century Fox and Walt Disney Studios, have declined to join the service because of concerns that YouTube's corporate parent, Google, has not done enough to deter online piracy, people familiar with the matter said. Paramount's corporate parent, Viacom, is embroiled in a copyright infringement suit against YouTube.

A YouTube spokesman issued a statement saying, "We've steadily been adding more and more titles since launching movies for rent on YouTube over a year ago and now have thousands of titles available. Outside of that, we don't comment on rumor, or speculation."

While YouTube will make the movies available to stream online for a limited rental period, consumers won't be able to purchase films and download them on a permanent basis under the current plans.

YouTube, which rose to prominence on the popularity of user-created videos, has been looking to bolster its bottom line with more professionally created content. It has allocated $100 million to underwrite the cost of original programming, which would be organized into content "channels," according to people briefed on the matter.

The online video service garnered attention early last year when it began making movies from the 2009 and 2010 Sundance film festivals available for online rental. YouTube now offers a limited selection of pictures to rent via the service, including Weinstein Co.'s animated film "Hoodwinked" and MGM's "Hannibal Rising." Other films, such as director Ivan Reitman's 1984 comedy "Ghostbusters" and Morgan Spurlock's 2004 fast-food documentary "Super Size Me," can be watched free with commercials.

However, consumer interest in paying to watch the limited selection of movies on YouTube thus far has been very low, according to a knowledgeable person.

Google's dominant online video service has been in talks with Hollywood executives for more than a year, seeking to expand its on-demand offerings with newer fare. Studio executives hope YouTube's vast online audience of more than 143 million users can be enticed to rent newly released films -- especially since YouTube's video can be watched on countless portable devices.  The studios are eager to bolster digital revenue to help offset declines in DVD sales.

-- Dawn C. Chmielewski

Times staff writer Ben Fritz contributed to this report.

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