YouTube Launches Rental Service, Undergoes Site Revamp

YouTube announced it would begin testing an online video rental service during a busy period in which the video-sharing Website also began to support HTML5 video and underwent a substantial aesthetic revamp. In addition to streamlining many features and simplifying its overall look, YouTube now lets users select between SD, HD or 1080p when viewing clips. While popular, YouTube faces competition in its rental endeavor from Netflix, Apple and other streaming media options.

YouTube announced that it would begin testing an online video rental service starting Jan. 22. As the site, having undergone a substantial aesthetic revision, gears up to compete against Netflix, Apple and other companies offering streaming video rentals, research suggests that YouTube is the sixth most visited among all Websites in the United States.

Instructions for how to rent movies on YouTube can be found here; users will need to sign up for Google Checkout in order to pay for the service.

The new rental feature marks a busy period for YouTube, which has rolled out HTML5-supported videos along with its revamped look. Originally acquired by Google in October 2006, YouTube has more content uploaded onto it in 60 days than three major U.S. networks, ABC, CBS and NBC, have broadcast in 60 years. With that amount of traffic comes substantial overhead, though, and the question remains of when YouTube's ad revenue will translate into substantial profits for Google.

"We've spent a lot of time over the last 10 months asking ourselves some tough questions about this page and posing some of those questions to you in blog posts, roundtable discussions, one-on-one conversations with the community and even on forums," User Experience Designer Julian Frumar and Software Engineer Igor Kofman wrote in a Jan. 21 post on Broadcasting Ourselves, the official YouTube blog. "We're excited to unveil the first major example of our efforts to simplify and streamline the video page to offer the best possible watching experience for you."

As part of that redesign, the site's main page has been stripped down, and features such as the action bar have been streamlined or grouped together for faster access. In place of the five-star rating system, users can now give a particular video clip either a "Like" or "Don't Like." Users have more control over video quality, with the ability to select whether a particular clip is displayed in standard definition, high definition or 1080p.

Google also announced on Jan. 20 YouTube support for HTML5 video, albeit limited to nonmonetized and nonannotated videos for the moment. That may change as YouTube builds out the feature in months to come.

"HTML5 is a new Web standard that is gaining popularity rapidly and adds many new features to your Web experience," noted the YouTube team blog on Jan. 20. "Most notably for YouTube users, HTML5 includes support for video and audio playback. This means that users with an HTML5-compatible browser and support for the proper audio and video codecs can watch a video without needing to download a browser plug-in."

Around the time of YouTube's revamping, research company Experian Hitwise published data showing that the video-sharing site ranked sixth among all Websites in the United States, with users spending an average of 25 minutes and 25 seconds on the site per session.

Although YouTube could expect its popularity to help its new video rental service succeed, Experian Hitwise analyst Heather Dougherty noted Jan. 21, it faces substantial competition in that particular area from the likes of Netflix, and Apple. "In general, Netflix has become synonymous with movie rentals online and appeared three times in the top 10 search term variations of 'movie rentals' for the 12 weeks ending Jan. 16, 2010," Dougherty wrote in a research note.

YouTube's rental-movie test will start with five films from the Sundance Film Festival, but YouTube will likely have to expand its offerings in order to gain appreciable market share in that segment against the other companies.

"For any of the players in this space, video quality, breadth of selection and ease of use will be the key drivers of success," Dougherty added.