Google has announced that it will partner with major movie studios to stream a number of full-length films and TV shows for free on YouTube. The studios involved in the launch of this premium content section will include Sony, CBS, MGM, Lionsgate, Starz, and the BBC. The movies will be ad-supported, and ad revenue will be shared with the content owners. Those who love YouTube's user-generated video offerings should not fret, however, as those will remain on the site separate from the premium offerings.

Google has been growing its collection of full-length movies as of late, with MGM announcing in November of 2008 that it would begin adding some of its films to YouTube, starting with films like The Magnificent Seven and Bulletproof Monk. Then, earlier this month, rumors spread that Sony was working on a similar deal to add films to YouTube. Now, with MGM, Sony, and a handful of others on board, YouTube has taken a giant step in the right direction to figuring out how to monetize the site.

The premium-content section comes as some analysts predict that YouTube will lose almost $500 million this year due to bandwidth consumption, licensing fees, the difficulty in monetizing content, and other expenses. "In our view, the issue for YouTube going forward is to increase the percentage of its videos that can be monetized (likely through more deals with content companies) and to drive more advertiser demand through standardization of ad formats and improved ad effectiveness," Credit Suisse analysts Spencer Wang and Kenneth Sena said earlier this month.

So far, it looks like that premonition is coming true. The launch of the premium content section of YouTube will come with a site redesign to highlight the changes while keeping YouTube's main focus on user-generated clips. YouTube says that it plans to sprinkle video ads inside of the movie streams like Hulu (and unlike the rest of YouTube, which largely relies on ads being placed around the video on the page). Unfortunately, those outside the US will have to wait for the studios to like you again, as the premium content will be limited to US viewers only.

The move marks a more friendly relationship between YouTube and the studios, who have historically been wary of the ease with which users could upload copyrighted clips—indeed, that is the crux of Viacom's $1 billion lawsuit against YouTube. It will also put YouTube more directly in competition with the NBC-owned Hulu, which already streams a wide variety of full-length movies and TV shows. Hulu's carefully sandboxed approach to online video has been very attractive to content owners as of late, but YouTube is still the far more popular site. Premium content is what will help both YouTube and the studios make money online, and if there's one thing studios like, it's making money.

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