Google to offer pay-per-view rental site

Google is said to be in talks with movie studios about rental site to be offered by the end of 2010

As Apple gears up to announce its new on-demand TV service iTV, Google is said to be preparing a bombshell of its own: a pay-per-view, movie-rental service that will be available by the end of 2010.

Rumor has it that Google is in advanced talks with top movie studios over a global movie rental service that will be delivered via YouTube, which Google acquired in 2006 for $1.6 billion.  The service is likely to be launched first in the United States, where movies newly released on DVD will be available for streaming at $5 a piece, which some have questioned, as such a price is significantly higher than those of competitors, like Apple’s iTunes or Amazon’s Video on Demand. 

When reached for comment on the validity of the rumors, a YouTube spokesperson said via email: “We have nothing to announce at this time.”

The talks have reportedly been ongoing for several months, but have intensified in recent weeks.  

“Google and YouTube are a global phenomenon with a hell of a lot of eyeballs -- more than any cable or satellite service… They’ve talked about how many people they could steer to this… It’s a huge number," according to an anonymous insider who spoke with the Financial Times about the talks.

The race between technology and media companies over digital TV is on, and Google is just the latest company to jump in on the action.  This Wednesday, Apple is expected to announce its amped-up version of Apple TV - iTV - which will bring online TV viewing straight into users’ living rooms via their box sets. 

Dish Network also recently broke into the market for online content last week by offering streaming TV, and Netflix has been increasingly active in the acquisition of new releases for its Watch Instantly feature, which allows paid subscribers to watch available titles online.  And the online video site Hulu has reportedly been considering an initial public offering at a valuation of $2 billion.  

The news of Google’s efforts to offer online TV via YouTube is not really news.  In January Google launched a beta pay-per-view service that offered a limited selection of independent films, as well as health and education videos.  At that time, they were said to be in talks with major movie studios, but now those movie studios appear to be responsive, if not eager, to offer an online pay-per-view service for new releases through YouTube.

This turn of events ironically comes amidst a mounting legal battle between Hollywood media giant Viacom and Google over YouTube’s alleged copyright infringement.  Earlier this year Viacom filed a $1 billion lawsuit against Google and its online video streaming site YouTube for offering and profiting off of Viacom-copyrighted media files, such as clips of The Daily Show and The Colbert Report.  In June a U.S. District Court Judge ruled in favor of Google and YouTube, and Viacom has since filed a lawsuit to appeal the ruling.

While Google and YouTube representatives have nothing to say about the talks at the moment, the announcement will probably come soon after Apple’s September 1 announcement of iTV.

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