Sources familiar with a new deal in the works between YouTube and Sony Pictures told CNet the partnership will bring full-length films such as Spider-Man to YouTube.

The news comes as YouTube, the leader in online video sharing, faces intensifying competition from newer rivals such as Hulu (News Corp, NBC joint venture) who provide excellent quality full-length shows. Rival NetFlix also provides a very extensive online film library but requires a reasonably priced monthly subscription fee. Despite YouTube holding the top spot (by a significant margin) as top video sharing site, the company must continously innovate as new competitors with superior products launch.

In related news, Walt Disney last week announced it had licensed content to YouTube as well.