Hollywood goes Youtube. Well they actually did a while ago, they’re just finally admitting it. MGM just announced that they will be releasing a full-length feature film on YouTube. And this is most likely just the beginning. Lionsgate signed a deal with YouTube last summer but only for short clips from films and TV shows. MGM is planning on putting entire films and TV shows on the site.

The deal is that the studio gets 70% and Google gets the rest, much like the one Hulu began a year ago.

For Google, YouTube’s parent company, the deal is a turning point in its relationship with Hollywood. There was lots of distrust and bitter feelings in entertainment circles after the way Google dealt with copyright infringement on its site. But that was when Google was in the driver’s seat. Back then, thousands of YouTube’s users would post clips from TV shows and films on the site and YouTube executives told the studios they were powerless to prevent it–all the while YouTube amassed an enormous following.

The studios have Hulu to thank for forcing Google to soften its approach. Hulu, the video portal formed by NBC Universal and News Corp., has become the top outlet for watching full-length films and TV shows on the Web. The site is generating as many ad dollars in only its first year in business as the three-year-old YouTube, according to reports.

If Google wanted to duplicate Hulu’s success, it needed to make nice with film studios. So it did… When it comes to financial terms, Google has proven much more flexible than in the past, according to three studio sources.

The only obstacles to Google and YouTube getting more studios to post full-length movies is Google’s insistence on a particular ad format, say the sources. They declined to say which ad unit Google prefers. The other hurdle is that some studios are skeptical that users will accept all the ads that need to accompany a feature film in order to make it profitable.

Source Yahoo