Executives from Sony, Warner Bros and Lions Gate studios have met with YouTube to discuss the development of a streaming video service for new release films.
Early details suggest that YouTube could charge users per "rental" -- stepping away from its traditional short-length, ad-funded user generated content and instead entering the league of Apple's hugely popular iTunes or the likes of Amazon.com.
Negotiations are ongoing, with no guarantee a deal will be struck. All parties have declined to comment, except YouTube, which said: "We hope to expand on both our great relationship with movie studios and on the selection and types of videos we offer our community."
Reports claim a pricing structure would mimic the iTunes store, which charges about £2 to rent a film for a short period of time, usually 30 days -- or for 24 hours after the "play" button has been clicked.
It's also understood that some films would be available for free viewing, supported by YouTube's nascent pre-roll ads, which the company launched in March.
Besides melting YouTube's historically frosty relationship with Hollywood, the deal would provide a boon for films studios as well, helping offset the decline in cinema attendance and DVD sales, which are expected to fall by about 7% this year.
YouTube is by far the most popular video site on the web -- over 9bn clips were watched by 121m unique viewers last month in the US alone -- yet big name advertisers have been weary of its often questionable amateur content.
The website was previously thought to be massively in the red -- straining under server costs and little supporting advertising -- until earlier this year, when Google CEO Eric Schmidt hinted that YouTube was on the tipping point of profitability.
Since then, the company has been busy negotiating with a number of media content partners to build a substantial library of professional content with plans of monetisation.
Last month, YouTube announced a partnership with Time Warner properties including CNN and TNT. It agreed a similar deal in March with Walt Disney. Content deals are also in place with ESPN and the Cartoon Network.
Schmidt raised eyebrows in August with the $106m acquisition of On2, a company which specialises in video compression technology, suggesting Google was preparing to bolster YouTube's ability to stream full-length content, without risk of "caching" delays.
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