YouTube may stream movie rentals

Google Inc’s YouTube, the most- visited video website, is in discussions with Hollywood studios to start an online movie rental service, according to two people with knowledge of the talks.

Sony Pictures Entertainment and Lions Gate Entertainment Corp are talking with YouTube about offering new releases, said the people, who asked not to be named because the talks are private. The discussions are preliminary, both people said.

YouTube, which gets the bulk of its videos from users, is adding professionally produced material to lure more advertisers. The San Bruno, California-based internet company agreed last month to carry excerpts from Time Warner Inc’s CNN, Cartoon Network and Adult Swim, adding to the vault of older films and advertiser-supported clips from television programmes.

“Google’s trying to find ways to better monetise this very good asset,” said Andy Miedler, an analyst with Edward Jones & Co in St Louis who recommends the shares and doesn’t own any. “As long as the economics make sense, I certainly applaud them for trying to increase the revenue stream.”

Chris Dale, a YouTube spokesman, declined to comment on “rumors or speculation.” “We hope to expand on both our great relationships with movie studios and on the selection and types of videos we offer our community,” Dale said, without being more specific. The Wall Street Journal reported the talks earlier today, saying Warner Bros was also involved in the discussions.

Lions Gate, based in Vancouver and run from Santa Monica, California, is interested in ways to sell television shows and films online, Peter Wilkes, a spokesman, said in an interview.

The independent film studio sold 2 million downloads of its cable-television program “Mad Men” on Apple Inc’s iTunes store in the past year, Wilkes said. “We are always exploring alternatives for monetising our content in a digital environment,” Wilkes said.

YouTube’s service would compete with online film rentals offered by Amazon.com Inc and Apple’s iTunes. Cupertino, California-based Apple and Seattle-based Amazon.com both advertise online rentals for $3.99.