After a flurry of activity, Youtube is up to some more. It is now in talks with Sony Pictures to acquire licensing rights to show movies such as box office hit ‘SpiderMan’.

This comes just days after Disney announced it had licensed streaming content to the video giant. These will however just be in the form of ’shorts’ only at the present time from Disney sources including ABC and ESPN.

This is not an ideal situation for Youtube though who want and need to be showing full length and premium content to compete with the host of Websites that offer full length movies and TV shows via the internet. YouTube are trying to get streaming rights to the same premium content. However they have only managed to get the rights to a few movies from the archives of MGM studios.

Hulu, the mega successful video streaming website owned by News Corp. and NBC has become the standard for full length TV and movie content. The site is user friendly and provides a high quality user experience. Then there is Netflix, their streaming content needs a monthly subscription payment to gain access but have a much larger and more recent movie selection than Hulu’s site.

Netflix has also made the move from showing movies via PC to delivering streams straight to a TV set, via settop boxes like Roku and others. Apple TV are offer a mobile angle to viewers who download movies and TV shows to iPhones, iPods and other mobile devices.

The cable companies are also talking up their own online streaming plans. After years of putting money into Hollywood, the cable operators and premium movie channels could have an advantage when it comes to getting access to premium content.

This is where Crackle (Sony’s online video site) and YouTube can benefit one another. Sony Pictures want to push Crackle, and wants access to the massive Youtube audience. YouTube on the other hand, need premium movies and TV shows so need to make deals with studio and networks willing to post full length videos on the internet.

Many studi bosses still do not believe full length movies can make a profit on the net. To generate a decent return, a large amount of advertising must be shown. However, tests have shown that users do not like this.

The good news is that at this early stage at least, managers at Sony Pictures’ digital unit appear to believe in full length tv streams online.

They (Sony) purchased Crackle for a reputed $65 million in 2006, just prior to Google’s $1.65 billion buy out for YouTube. The website began as a video sharing website just like the YouTube. In July 2007, they changed focus when it was clear that YouTube had sewn up the video website arena.

A visit to Crackle shows Sony Pictures is a trailblazer when it comes to posting movies online. Not only is the studio posting more full length movies on the internet (over 60) than the competition but the quality of the movies is high.

Sony have also licensed its content to websites like Hulu, Gaia, Sprint and AOL. Hulu has a deal to showcase nine top movies.

If the deal with Youtube follows a similar line then it probably will not give YouTube access to more than 10 or so movies. The studio has also asked some partners to display films using the Crackle video player, a request that undoubtedly is designed to give Sony Pictures control of advertising and to direct people back to Crackle. The studio also does not allow syndication. So no embedding.

However it is clear that YouTube cannot be too fussy. The truth is that two years ago they misjudged how much they needed Hollywood.

But now, YouTube have changed focus and are making their website more appealing to big entertainment companies, such as offering widescreen and better quality streaming, and filtering out pirated content.

There’s also the question of what the studios intend to do with the traditional distribution model. Hollywood has long had agreements in place to release films through a complex assortment of channels, including theatrical release, DVD sales, and cable, premium, and broadcast outlets. For example, film-industry sources say the money Hollywood earns from the Web is a trickle compared with the ocean of cash it receives each year from cable providers.

However, more and more people are canceling their cable subscriptions and turning to the Web for entertainment. Even execs from the cable companies have acknowledged this. Last week, after Disney announced the agreement with YouTube.

If YouTube only gets a handful of Sony movies and if they aren’t the best and if there’s lots of strings attached, YouTube should still go ahead. Sony and Disney are worth the trouble in the long run.

YouTube will also know that Sony Pictures’ have a massive movie library screaming to be streamed, and Youtube dont just want but need to be in there.

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