NEW YORK (Reuters) - News Corp. NWSa.N and NBC Universal said on Thursday they will launch a free online video site this summer, featuring full-length movies and television shows in a challenge to Google Inc.’s (GOOG.O) YouTube.
The move underscores how serious a threat YouTube has become to media companies, which fear losing a new generation of viewers who are as likely to be found in front of computers as television screens. Another media company, Viacom Inc. VIAb.N, has sued Google for $1 billion (509 million pounds) over unauthorised use of its videos on YouTube.
While NBC and News Corp. compete fiercely for TV and movie audiences globally, their partnership shows the risks executives will take to regain control over content as more consumers turn to YouTube or Apple Inc.’s (AAPL.O) iTunes.
The two companies also enlisted three of Google’s largest rivals — Yahoo Inc. YHOO.O, Microsoft Corp. (MSFT.O) and Time Warner Inc.’s TWX.N AOL — as distributors of the entertainment on their Web sites. Discussions are ongoing with other Internet companies, they said.
Content will include such popular TV shows like NBC’s “Saturday Night Live” and “The Simpsons,” and hit films such as “The Devil Wears Prada” and “Borat” from News Corp.’s Fox.
“This is a game changer for Internet video,” News Corp. Chief Operating Officer Peter Chernin said in a statement. “We’ll have access to just about the entire U.S. Internet audience at launch.”
The Internet video market is key to the future of media and will be vast enough to accommodate competition, analysts said. But one area where YouTube is clearly ahead with consumers is in the uploading of home-made videos — a function that has made the site extremely popular with the younger audience.
“It’s still not clear how user-generated content is going to fit in and it’s still not clear that all of these companies won’t do a deal with Google over time,” said Richard Greenfield of Pali Capital.
YouTube can still distinguish itself with its tools for users to share homemade, as well as professional, material.
“It’s not actually going to take away from YouTube because it’s as much about the social experience as the video. So YouTube is going to be fine,” said James McQuivey, an analyst with Forrester Research.
News Corp.’s Chernin said the companies “expect this site to be the biggest video destination on the Web” and planned to make the content exclusive to sites associated with News Corp., NBC or the joint venture.
Still, Chernin and NBC Universal Chief Executive Jeff Zucker sought to play down a face-off with YouTube during a conference call to discuss the project.
Chernin, who denied that they view the new site as a “YouTube killer,” said they had even talked with Google’s CEO Eric Schmidt about the venture.
“We are, in fact, willing to sit down and talk to anybody who wants to distribute this provided they meet our economic terms and obviously meet our copyright protection terms,” Chernin said. “We have had a conversation with Eric Schmidt this morning and they are considering this.”
In a statement, YouTube said: “We value our relationships with NBC and Fox as they continue to upload content to promote their signature programming and look forward to working with them in the future.”
NBC and News Corp. had sought to woo additional media companies into their partnership, including Viacom and CBS Corp. CBSa.N, according to people familiar with the matter.
Chernin and Zucker said discussions were still being held with other content providers.
Viacom said it welcomed the new venture as a vehicle for spreading entertainment online while protecting copyright holders. CBS said it would continue to discuss the possibility of working with the venture, among other initiatives.
Executives briefed on the project, whose name has not been disclosed, say it will include its own site and allow partners to feature video on their own Web sites. NBC.com, meanwhile, plans to add social networking and video sharing functions.
The News Corp. and NBC venture includes an Internet media player, which will be embedded on partner sites. Advertising revenue will likely be split between the site carrying the content and the company that produced the entertainment.
News Corp. Class A shares fell 0.43 percent to $23.33 on the New York Stock Exchange. Shares of General Electric (GE.N), which with Vivendi (VIV.PA) owns NBC Universal, rose 0.93 percent to $35.81. Google shares rose 1.2 percent to $462.04.