If you are a movie buff like me, the news about YouTube getting into the movie rental business must not have skipped your attention. Google's
According to some, Google has now come head-to-head with movie rental company Netflix
Video killed the radio star
In today's world, video is no longer a word only associated with TV or computer screens. It has moved far beyond that scale, becoming a phenomenon accessible from anywhere -- phones, tablets, laptops, etc.
And in that greater sphere, YouTube has been the place to find everything from music and movie trailers to home video clips. According to YouTube's blog, the site clocks nearly 2 billion views per day. It also said that users spend close to 15 minutes watching YouTube, while they spend five hours on the television. YouTube's future strategy will therefore depend on the immediacy and significance of the shift of consumer preference toward online media.
For Netflix, the biggest online streaming movie rental service provider, this new business focus for YouTube might mean war. Google has the chance to take a bite out of its customer base. While going head to head with Google has its disadvantages, Netflix might actually not be going for a head-on collision here. The targeted market segments for each company are actually different.
What's on offer?
For the most part, YouTube will add movies from companies like Sony
Newer titles will cost $3.99 on a pay-per-view basis. YouTube's movie offering would include old classics like Taxi Driver and Goodfellas, as well as more recent blockbusters like Inception and King's Speech.
YouTube will let viewers pay a certain price per movie and then they'll normally have 30 days to watch it. When viewers start watching a movie, they will typically have 24 hours to finish it. There are also some free movies available on the Google Movies website.
So is it safe for Netflix?
Netflix's subscription plan, however, is clearly different from the one described above. Netflix users pay a certain amount each month, and it covers unlimited movies or TV episodes that are in their catalogs. Netflix can also stream movies directly to TVs using devices like the Sony Playstation3, Nintendo Wii, and Microsoft Xbox 360.
Clearly, Netflix intends to build up a more loyal, recurring customer base, while YouTube might be attempting to knock on the door of the casual, one-time user. We'll see if YouTube sticks with that shorter-term focus.
With the difference in the subscription plans and the type of content they provide, it's highly unlikely that Google might take a bite out of Netflix's current user base.
On the other hand, Google might actually need to fight players like Amazon
The other player in this industry is the all powerful Apple
Fool's story: Take one
With a different subscription scheme than Netflix, YouTube's new movie venture is not as likely to eat into Netflix's shares as Amazon's or Apple's. So, fellow Fools holding Netflix shares don't need to worry much. However, what becomes of the three ways battle of Google, Apple, and Amazon will probably look like an edge-of-the-seat thriller.
Arunava De does not own shares of the companies mentioned here. Motley Fool newsletter services have recommended Amazon.com, Google, Apple, and Netflix. The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services have recommended buying puts in Netflix. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.