YouTube in Talks with Major Movie Studios

It was announced yesterday that YouTube, the world's most popular video viewing site, could start having movies for rent on its site.

The effect this possible deal had Netflix Inc. and Blockbuster Inc was clear as both companies' stock prices dropped. According to Reuters.com, "shares of Netflix fell about 4 percent to $40.10 while shares of Blockbuster declined about 10 percent to $1.08." The deal at hand is one between YouTube, which is owned by Google Inc., and several major movie studios about the possibility of the site to start charging to rent movies.

Netflix that might be hurt the most because of the digital streaming service. If this deal goes through, then this would be the first time YouTube would charge people a viewing fee.

As reported on LATimes.com, "despite YouTube's dominance in Internet video, several companies already offer online movie rentals and downloads, including Amazon.com Inc. and Apple Inc. The fast-growing DVDs-by-mail service Netflix also streams films online. But with 437 million visitors a month, YouTube is the gorilla in the Internet video market, and any studio that aligns with it will be in an advantaged position against rivals. This means Google might finally be able to make YouTube profitable. And for the studios, it might be a way to win back the lost revenue from declining DVD sales."