As YouTube evolves from its roots as the mega community for all video comers to a profitable business, the company is announcing a video rental program which launches in conjunction with the Sundance Film Festival (January 21-31, 2010). Against the backdrop of Sundance, YouTube rentals will launch with five Sundance films—two from last year’s competition (The Cove, Children of Invention) and three from this year’s “Next “program. Film pricing and rental terms are to be established by the filmmaker with the filmmaker retaining all distribution rights. Films will be $3.99 payable through Google Checkout; four of the films will have a 48-hour rental window and one will have a 24-hour window. All films, from Sundance and future partners/content creators, will be streamed to a consumer’s browser and will initially be secured using Adobe RTMPe to encrypt streams in transit. HD content will not be featured at launch but is expected to be part of the service.
Film rentals are a natural progression for YouTube and hardly a major surprise, given the number of competitors that range from Netflix to Apple TV, and clearly not part of a first-mover strategy. The areas of filmmaker control over pricing, rights and rental windows is a market differentiator but is it enough to evoke more than a tremor in the consumer media marketplace?
The answer requires a broader view of Google’s media cloud strategy. Simply put, it is Google’s intention to become the leading distributor of consumer-oriented content—books, newspapers, magazines TV, movies and (perhaps) music. All content will be stored in Google’s cloud and distributed—primarily through a browser interface—to any device associated to a individual consumer ranging from Smartphone to tablet to televisions via a set top box. Google will provide the tools for varied monetization schemes in a revenue sharing model as well as seamless integration into the leading search engine.
The key consumer-facing components of this cloud strategy are YouTube (all things TV, film and video) and Google Editions (all things print). As YouTube rentals unfold, you will be able to see a set of attributes that show elements of this cloud strategy: the rental service will likely expand to include distribution to mobile platforms and OTT TV platforms on which YouTube already have a presence (i.e. Apple TV, Boxee, Wii, PS3) with such features as enhanced search and discovery via closed captioning/auto speech recognition.
Google’s media strategy is geared to take dead aim at Apple. Both companies (along, perhaps with Amazon) will likely become the future archetypes for successful media titans with an emphasis on friction-free, content agnostic, multiplatform monetization. At this point, it’s an interesting blueprint; the devil will be in the details.