Verizon to offer YouTube on cell phones

By Sinead Carew and Yinka Adegoke

NEW YORK  - Verizon Wireless said on Tuesday it would deliver selected video clips from YouTube to cell phones starting in December in a bid to increase subscriptions to its mobile media service.

YouTube, the leading online video sharing site which was bought by Internet search leader Google Inc. this month, said it hopes to expand beyond computers to phones. It did not reveal the financial terms of the deal.

Verizon Wireless, a venture of Verizon Communications Inc.and Vodafone Group Plc, has been betting increasingly on text messaging and advanced services like music and video for growth as phone call prices keep falling.

But so far only a small minority of U.S. consumers use features like video on their cell phones. Verizon Wireless hopes the huge popularity of many home videos shown on YouTube could help boost use of its Vcast wireless media service.

"The user-generated content space is a very important sector in media," said Robin Chan, marketing director at Verizon Wireless, who believes the deal could help increase its service revenue.

"Vcast subscribers tend to be higher-value customers in terms of ARPU (average revenue per user) versus traditional voice subscribers," Chan said.

Under the YouTube agreement, consumers who pay a $15 monthly fee for Vcast will be able to use their cell phones to view consumer-generated content posted on YouTube's Web site.

Chan also said customers would also be able to post videos from their phones to YouTube more easily than before by using a five-digit short code instead of an e-mail address.

Verizon said about 20 million of its customers have phones that could support Vcast. But only about 10 percent of these phone users have subscribed to Vcast, according to estimates from Ovum analyst Roger Entner.

YouTube said the pact with Verizon was exclusive for a short period. It did not say when it would be free to pursue additional deals with other wireless providers.

YouTube, which gets more than 100 million views of its videos a day, is exploring whether it can integrate YouTube into a variety of handheld devices with Internet connections.

"Mobile is just one of the things we're looking at," said YouTube's co-founder, Steve Chen. He did not give details.