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Viacom Tunes Into YouTube, Google Play

Written by: Trefis 04/18/12 - 2:46 PM EDT
Tickers in this article: VIA GOOG
The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (Trefis) -- Viacom(VIA) recently signed a licensing agreement with Google(GOOG) under which the users of Google Play and YouTube will be able to pay for and watch about 500 movies from Paramount Pictures studio. These movies will be available for $2.99 to $3.99 for standard definition format and at a higher price for high definition.

Viacom is doing what's imperative for the company -- looking beyond the traditional monetization channels and embracing the online shift. Google is providing a platform similar to what Apple(AAPL) did with its iTunes. See our complete analysis for Viacom

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We note that Apple is making roughly a little over $320 million per year by selling movies and TV shows on iTunes. Within this, the movie sales account for less than $25 million, although the growth is healthy.

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The essence is that this monetization channel is still very small. However, it is inevitable for content companies like Viacom to adopt it as DVD sales decline.

For a long time, TV channels have played a major role in Viacom's value but last year showcased company's capability in filmed entertainment business when it topped worldwide box office sales.