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This article was published on February 2, 2010

Are YouTube’s Movie Rental Numbers Bad?

Are YouTube’s Movie Rental Numbers Bad?

2005_youtube2YouTube’s much-hyped movie rental service has started off with a whimper, rather than a bang.

The service, which offered five Sundance Film Festival titles for 10 days last month, netted YouTube USD $10,709.16. At $3.99 per rental, this means that only 2,684 films were rented. These numbers likely haven’t scared their competitors at Netflix, the iTunes Store and Amazon’s Video on Demand.

While pundits all over the web have labeled YouTube’s lack of success here as a failure for the pay-for-content model — even going so far as to compare it to Newsday’s woes — the comparison seems to be a faulty one.

It does bear noting that this movie rental service offered only five indie films for 10 days. Despite all of the press that tech blogs gave the service, it wasn’t advertised on the main site during this time. In fact, it’s actually rather difficult to find the rentals section of the site. The demand for the service wouldn’t have been particularly high, as the program was running for only 10 days, the content was hard to find and it was geared towards a niche. And yet the service still was able to find 2,684 people willing to part with $4 to watch a film.

YouTube is currently in talks with major studios about expanding the rental program to more mainstream fare. While this will bring it into competition with services like Netflix, they also intend to partner with less mainstream content providers to create a broader product base than a company like Netflix. Deals are already in the works with Anime studios, educational content providers and other less-conventional content makers. While these content deals aren’t likely to draw a huge audience, they will attract new users to the service.

In short, YouTube’s still working on their rental model. Their content, while weak at the moment, will only get stronger. The online video business just got that much more interesting.

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