While this partnership is a step forward for both digital distribution and YouTube, don't expect the video line-up to make you drool any time soon. "It's safe to say you won't see those blockbuster theatricals shortly after their release or after their TV window," admitted Mr Packer. MGM plans to start slowly, with no more than 30 to 40 movies up at a time. His sentiment is shared by other studios, who are drawn more to the professional presentation of Hulu.
Up to this point, the relationship between Hollywood and YouTube has been nothing short of icy. The Digital Millennium Copyright Act, which told media companies YouTube was not legally required to remove unauthorized material from the site unless asked specifically to do so by the owner, has provoked animosity from the studios, who believe YouTube should have taken greater measures to remove pirated clips. “A lot of studios have taken the position that they won’t embrace YouTube until everything is perfect and the copyright protection is ironclad,” Mr. Marvis of Lionsgate said.
Now, YouTube hopes to entice these studios back with new features such as VideoID, which spots pirated clips and allows the studios to directly decide whether to take the video down or keep it up and generate advertising revenue from it. The current deal will give the studios 70 percent of the profits from advertising, with the other 30 percent going to YouTube's owner Google. The final obstacle for deals with other studies lies in Google's insistence at particular ad-formatting, along with doubts that the ads will generate enough revenue to make the films profitable.
If all goes well, the MGM channels should be running within the next 18 months.