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Google launches Canadian online movie service Add to ...

Google Inc. is taking its fight against Netflix north of the border, launching a YouTube-based movie rental service in Canada.

YouTube Movies, which launched with a stable of some 3,000 titles in the U.S. this May, quietly launched a Canadian sister site on Wednesday. The service allows users to rent new and classic movies for about $4 or $5. It will compete directly with Netflix, which offers Canadians unlimited access to thousands of movies and TV shows for a flat monthly subscription of about $8. Users will have 30 days from the moment they rent a movie to begin watching it, and 48 hours to finish.

Like Netflix, YouTube Movies appears to have a fairly limited selection of new content. But the Canadian version of YouTube Movies appears to have more new Hollywood releases than the Canadian Netflix service. Google has signed deals with Canadian studios such as Mongrel and Alliance, as well as numerous American production companies, as it attempts to further monetize YouTube.

Even though Google’s video service is the third-most-visited site on the Web, YouTube has only recently begun to generate revenue, and most of that money comes from ads. Google has also tried to make the site a destination for higher-end content by introducing high-definition audio and video, as well as sponsoring and streaming various live events, including rock concerts.

Google has floated the idea of a YouTube-based movie service for years, and initially launched a very limited beta version of the service last year. But it didn’t pick up steam until this May, when the company signed deals with various U.S. movie studios and began introducing more new titles, such as recent big-budget Hollywood hits Limitless and Harry Potter and the Deathly Hallows Part 1.

But the service is still likely to face hurdles in attracting Canadian consumers. Since the precipitous decline of traditional movie rental outlets, and the ease with which users can legally or illegally download movies from the Internet, a number of new businesses have popped up to fill the vacuum left by companies such as Blockbuster. In addition to Netflix – which, by some measures, is the number-one source of Web bandwidth usage in North America – startups such as Flickme.com have also begun offering consumers online movie rentals. Apple sells and rents movies through its iTunes store, and major cable and TV companies such as Bell, Rogers and ESPN, give their traditional subscribers access to on-demand and live streaming content online.

To counter Netflix’s relatively low monthly fee, Google is using YouTube’s already massive store of content. Many of the older and smaller-budget films on the YouTube Movies site are freely available in their entirety on the site. The rental Web pages for the new releases also often contain extras such as cast interviews, which show up as separate YouTube videos.

Google is also tying the movie rental service to its existing products in the mobile and home entertainment space. Users will be able to stream their rentals via tablets running on Google’s Android operating system, as well as Google TV, the company’s tool for Web-based entertainment on Internet-equipped TV sets.

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