YouTube to Offer Full-Length Movies from MGM

Sam Gustin writes: Faced with a gathering threat from online video rival Hulu, YouTube, Google's wildly popular -- if legally and financially-challenged -- video site, is taking another step toward going legit.

On Monday, the company will announce a deal with Hollywood studio MGM to stream feature length movies on the site, according to the New York Times.

The partnership is a defensive move by YouTube, which is feeling the heat from Hulu, the NBC Universal/News Corp. online video joint venture, which has surprised naysayers with impressive growth since its launch last year. Unlike YouTube, Hulu has attracted substantial advertising dollars thanks to its clean interface and focus on legal conent.

Per the MGM-YouTube deal, ads will run alongside a very limited initial run of movies and television shows. Terms of the pact weren't disclosed, although News.com reports that 70 percent of the profits typically go to YouTube's studio partners.

"We believe in comprehensiveness, and we want to have deals with everybody," Jordan Hoffner, director of content partnerships for YouTube, told the Times. "We want to be able to give users the most content possible."

The move is the latest sign that YouTube -- which has been criticized by major media companies for allowing content that allegedly violates copyright law -- wants to play nice with the major movie studios. From the Times:

In the last few months, YouTube has swept its virtual floors and painted its stage as it prepares to offer more professional videos. This month, it introduced a "theater view" button that expands the viewing screen and darkens the rest of the Web page for optimum viewing -- a feature similar to one introduced by Hulu.

YouTube has also developed a system called VideoID. It allows media companies to spot unauthorized clips of their material on the site, and then either remove the clips or leave them up and sell ads on them. As part of its deal, MGM will begin scouring YouTube for studio clips, from properties like the James Bond and Rocky franchises, and pulling many of them from the site.

But MGM will also work with YouTube to choose which clips can remain online, supported by advertising.

"YouTube is essentially saying to media companies, 'We are sorry for our past copyright stance; we weren't thinking big enough. Let's see how we can make some money together,' " said James L. McQuivey, an analyst at Forrester Research.

Mr. McQuivey thinks the strategy can work. "They have hundreds of millions of views," he said, "and it will be very hard for studios to pass that up."