YouTube (NASDAQ: GOOG) Competes with Netflix (NASDAQ: NFLX)

Google’s (NASDAQ: GOOG) YouTube is attempting to take on Netflix (NASDAQ: NFLX) by streaming full-length movies through collaborations with Hollywood movie studios like Sony Corp., Warner Brothers, Universal Pictures and Lionsgate. About 3,000 movies will be offered on Youtube, available for rent by United States viewers, at about $3.99 each.

YouTube is most known for allowing users to post their own original content, although last year YouTube created a video rental store with about 3,000 titles – but it was mostly Bollywood films and indy movies instead of major releases. The hope is that by moving the video rental portion of the site into a selection of about 6,000 total movies available for rent, that users will remain on YouTube longer than the few minutes they spend on average now, viewing content submitted by other users.

Movies rented through YouTube can be watched via any YouTube account on any computer. You have 30 days to watch any movie that you rent, but once you begin watching, you’ll have 24 hours to view the full movie before it’s no longer available to you. “You will discover more and more of the content you love on YouTube, which is now available on 350 million devices. We know this because you are watching videos to the tune of 2 billion views a day. But you are spending just 15 minutes a day on YouTube, and spending five hours a day watching TV. As the lines between online and offline continue to blur, we think that is going to change,” wrote Kamangar, head of YouTube in a blog post.

The new movie rentals can be obtained from

Netflix allows users to receive DVD’s in the mail as well as watch movies streamed to their computers or Netflix-ready devices and televisions for about $9 a month. Will YouTube continue to charge $3.99 per rental and succeed, or will the one-price-unlimited-internet streaming option of Netflix continue to win out? Financially, it seems Netflix is the better option, but it may depend on how quickly YouTube is able to add new movies in comparison to Netflix.





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