The site would be either part of or connected to YouTube, and Google would use its massive search and video empires to direct new users to the new service, helping it stand toe-to-toe with Apple and other competitors in the space.
According to anonymous sources cited by The Financial Times, including an executive with knowledge of the deal, talks have been taking place for months, but they've picked up recently. The big reveal here is not the fact that Google wants to launch such a service — we've known that for a long time — but the reports that studios are increasingly enthusiastic, so much so that the service is expected to go live by year's end.
Many enthusiasts and bloggers believe that Apple will release a new version of the Apple TV platform at an event later this week, so the pressure is on Google to show the world what it's planning as soon as possible. The Financial Times story says that Google's service will be available first in the United States, but that other countries will be added later.
It also says that the rentals will cost $5 — significantly more than the rentals at iTunes or Amazon Video on Demand. We find that number hard to believe, to be honest. Google is not likely to price its service too highly in comparison to competitors, which typically charge between two and four dollars for a rental.
Building on What's Already There
Google actually began testing out video rentals at YouTube months ago. Its first public test involved a handful of independent films from the Sundance Film Festival. Reports were that the test was not a financial success, but Google nevertheless expanded its service to include a much larger and more mainstream base of titles. It still was not a real competitor to iTunes or Amazon Video on Demand.
Those early rollouts may have been for testing purposes, though, and Google didn't really sell them with search links and YouTube promotions like The Financial Times describes. One of the executives The Financial Times spoke with said, "They’ve talked about how many people they could steer to this . . . it’s a huge number."