YouTube is set to debut movie rentals this week with a limited selection of independent films from the Sundance Film Festival, according to YouTube Biz Blog.

The addition of feature-length films represents a new opportunity for YouTube to generate rental revenue––in addition to ad revenue–– with its large engaged audience, according to Hitwise Intelligence.

Already a destination for viewing both short and long videos online, YouTube ranked 6th among all websites in the US during the 12 weeks ended Jan. 16, 2010, with visitors spending an average of 25 minutes and 25 seconds on the website.

In addition, YouTube ranked second behind Momo Mesh for websites that receive traffic from the search term "movies online" during the same period.

Last week, among all of the search terms that drove traffic to YouTube, 2179 included the word "movie" or "movies," although 291 also included the word "free."

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YouTube has numerous competitors in the movie rental space, including Netflix, Apple, and Amazon. However, in general, Netflix has become synonymous with movie rentals online––and appeared three times (at Nos. 1, 8, and 9) in the top 10 search term variations of "movie rentals" for the 12 weeks ended Jan. 16.

"For any of the players in this space, video quality, breadth of selection and ease of use will be the key drivers of success," writes Heather Dougherty, director of research at Hitwise.

In November 2009, YouTube, which is owned by Google, delivered nearly 12 billion videos to 128.1 million viewers, about 94.3 videos per viewer, according to comScore.

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