Films come to Facebook

10 March 2011

NEW YORK: Warner Brothers, the media group, is testing an innovative online distribution model by making one of its films available to rent via Facebook, the social network.

As part of this initiative, American members of the Web 2.0 platform can watch The Dark Knight - selected because it already boasts 4m "likes" among netizens - directly on Facebook.

Moreover, viewers will be able to pay the $3 fee with 30 Credits, Facebook's virtual currency, which is already used on 400 games and applications.

"We don't have a lot of preconceived notions. We view this as a test, but we think it's really important to get out there and creatively present our movies," Thomas Gewecke, president of Warner Brothers Digital Distribution, told the San Francisco Chronicle.

"Facebook has become a daily destination for hundreds of millions of people ... It gives consumers a simple, convenient way to access and enjoy our films through the world's largest social network."

Such a strategy marks the latest installment of a major digital push by the company, which now offers "app editions" enabling buyers in 23 countries to stream The Dark Knight and Inception.

"This platform allows us to experiment with an early version of what you might call a 'connected movie' - the ability for us to offer new extras over time as updates," Gewecke continued.

James McQuivey, an analyst at research firm Forrester, suggested Warner Brothers was wisely taking content to consumers by leveraging Facebook, while also circumventing third parties.

"If Warner can build a direct relationship to those customers through a channel they frequent more often than they visit local retailers or cable VOD menus, this could be a lucrative marketing platform for them," he said.

"Plus, they can use the uniqueness of this event to test a different price point."

As Facebook takes a 30% share of all purchases made using Facebook Credits, this may represent a valuable incremental revenue source, alongside putting pressure on Apple's iTunes and Netflix.

"We're looking forward to seeing the new and interesting ways that developers and partners use Credits to offer virtual and digital goods in the future," Jonathan Thaw, a Facebook spokesman.

Ingrid Chung, a Goldman Sachs analyst, predicted it was possible for Facebook to challenge Netflix, but any transition would be slow.

"[Facebook] lacks content, does not have wide distribution across devices that connect to the living room TV [and] has few people on the payments platform," she argued.

"On a longer-term basis, we think that Facebook could become a credible threat," Chung added. "The 'wisdom of friends' could be a bigger driver of movie viewership than the 'wisdom of crowds.'"

However, Alex Rampell, the chief executive of transactional advertising specialist TrialPay, believes Facebook's goal does not lie in competing with established players such as Netflix.

"I think this is much more about payments than about movies," he said. "It seems like a logical step to use the currency to pay for movies."

Paul Verna, a senior analyst at eMarketer, was even more muted in his expectations concerning the potential of this service.

"People don't really go to Facebook to sit down in front of a TV to watch full-length movies," he said.

"You don't think of curling up on a couch on a Saturday night and watching movies on YouTube. You think of Netflix for that."

Data sourced from San Francisco Chronicle, New York Times, Bloomberg, Reuters, Variety; additional content by Warc staff