Right now YouTube may have the market cornered on talking babies and ridiculous videos involving guys getting hit in the crotch, but when it comes to streaming anything that’s actually, you know, good, people are going to Netflix Instant Watch and Hulu. That may be about to change.

On Friday YouTube UK announced that they were set to launch a new movies on-demand service after making deals with Lionsgate, MGM, and Sony to stream classic content like Night of the Living Dead. Now word is that YouTube parent Google is in talks with even more major Hollywood studios to expand their catalogue and begin providing first run, on-demand rentals which will be available simultaneously with DVD releases. For a fee of course, probably around $5.

YouTube is already streaming smaller movies from smaller studios here but they won’t be a major player until they expand their catalogue to compete with Netflix. I’d say they may not be even then. The convenience of Netflix instant watch, which can stream movies straight to your TV using a large number of different devices easily available to almost anyone, is impossible to beat. From a consumer perspective they have, by far, the best product. Hulu Plus and Google will try to compete, but Netflix has a head start.