21 January 2010 | Author: D. Warburton Search Copywriter

YouTube expands to offer film rentals

YouTube is launching its first paid-for movie rental service tomorrow, allowing users in the United States to view films from the Sundance Film Festival.

The BBC reports that YouTube will offer five films from the current Sundance festival as well as last year's event, with users being able to view films for $3.99 (£2.50) each and watch them over a 48-hour period.

This is a big step for YouTube, which has long been in discussions over paid-for feature films to boost its revenue. Despite being the world's most popular video sharing site, reportedly serving over one billion views per day in September according to CEO Chad Hurley, YouTube has been struggling to turn a profit ever since Google bought the site for $1.65 billion in 2006.

Analysts are viewing this as a vital first step into the world of paid-for content that could lead to more films being offering through the site from major distributors. Mike McGuire of Gartner Research stated: "This is a huge move for YouTube in the sense of them trying to monetise the site.

"This certainly opens the door for them with bigger movie studios.

"Content is king in this kind of business and Sundance is a good first step.

"Negotiating with the major studios over distribution rights however is not for the faint hearted. Google has to perfect its delivery model and its billing system."

By offering pay-per-view films, YouTube will be in direct competition with services such as Apple's iTunes, Amazon.com and Microsoft's XBox Live. The company will also have to win over studios that are currently opting to put their content on Hulu, a joint venture between major studios NBC Universal, News Corporation and Walt Disney that has had more success attracting marketers.

YouTube is whetting users' appetites about the possibility of major film releases being offered through the site. In a recent blog post, it revealed: "In the coming weeks we'll also invite a small group of partners across other industries, in addition to independent film, to participate in this new option."