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YouTube Red eyes entering movie and TV show licensing market

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YouTube Red already offers ad-free content, offline viewing and a huge music catalog, but in the near future it might also offer exclusive TV shows and movies.

That’s according to the Wall Street Journal, citing sources familiar with Hollywood’s discussions. According to the report, YouTube wants to license new movies that will be shown exclusively to Red customers, at the same time or shortly after they premiere on live TV or in theaters — similar to the timeframe for DVD releases.

YouTube is in talks with Hollywood studios through its Google Play partnerships, but we don’t know what specific content the video service is looking to license. Currently, Red has 10 movies and series planned for next year, including a horror series involving Internet superstar PewDiePie.

Entering into the licensing market would make Red a competitor to Netflix, Amazon Instant Video, and Hulu. All three license content from Hollywood and cable networks, with Hulu and Amazon spending $1.5 billion this year, and Netflix spending $3.3 billion, according to RBC Capital Markets analyst David Bank.

Alphabet, the owner of Google (which in turn owns YouTube), has the cash reserves to splash out on licensing — with a rumored $60 billion saved up — and it may need to start spending to entice users to subscribe to Red. YouTube is also earning more from each user than Netflix and Hulu, though it does offer a lot more in its subscription bundle.

Adding in licensed movies and TV shows would make Red comparable to Amazon Prime, which offers Instant Video, Music, and one-day delivery all in a $99 per year bundle. Red already offers offline viewing, background audio, and a music streaming service.

It is still not clear what route YouTube wants to take with Red, though licensing high-quality content would be a way to remove the sting of paying for YouTube. Online polls suggest that most users of the video service will not pay for the subscription at the present time.

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