Youku and Twentieth Century Fox have reached a licensing agreement that will put 250 new and library movies on the Youku Cinema premium on-demand service over the next two years. The first of these titles will be available in time for viewing as families gather to celebrate the 2012 Lunar New on January 23.

Among the included films are titles in popular franchises like Planet of the Apes, Ice Age, X-Men and Alien.

Youku said 13.5 percent of its Cinema users now pays to view content at least once per month, which according to the company is three times the number six months ago and has added up to more than a million transactions. Youku Cinema launched in October 2010 and priced itself significantly below theater ticket prices to encourage consumers to try the service; each movie rental is just 5 RMB (less than$1).

Youku chief financial officer Liu Yue said the rapid growth of Youku Cinema proved the revenue growth potential of premium online viewing as a business model, when combined with Youku’s easy payment system and high quality viewing experience.

The low price point was also important to provide an attractive alternative to the piracy that has historically made content owners reluctant to enter Chinese partnerships. “We have been working closely with Hollywood studios in providing quality content to millions of Chinese Internet users while effectively protecting intellectual properties,” said Zhu Huilong, Youku vice president of movie operations and corporate development.

Related links:

Chicago Tribune – Youku pacts with Fox: Chinese streaming site licenses 250 titles

Seeking Alpha – Youku-Twentieth Century Deal Expands Content, Improves User Experience

FilmBiz Asia – Deals and disputes multiply in China video sector