Warner Bros. to offer movie rentals on Facebook

Posted by admin on Mar 8, 2011 | 1 comment

Warner Bros. will begin offering select movies through Facebook, a move that will enable the social-networking giant to compete in the online movie-rental market The new offering—which was made by Warner Brothers without explicit assistance from Facebook—puts Facebook Inc. in greater competition with Netflix Inc. and other tech companies vying for position in the ever-expanding online-video-services market. It also comes as movie studios are increasingly testing new methods of distribution for their movies.

Warner Bros, a unit of Time Warner Inc., is offering Facebook users the option to stream “The Dark Knight” directly through the social-networking site. It is one of the first times that a major media company has used the social-networking site as a means to directly sell digital media. Additional titles will be available for rent or purchase in the coming months, Warner Bros said.

The studio asks users to pay with Facebook Credits, an in-house virtual currency that Facebook rolled out in January to all developers of apps on its site. Used largely by game companies, Credits are a mandatory universal payment system for buying digital and virtual goods, for which Facebook takes a 30% commission. The “Dark Knight” video costs 30 credits, the equivalent of $3, for a 48-hour rental.

Consumers will have full Facebook functionality during the viewing experience, including the ability to post comments, status updates and interact with their friends. The program is available only to consumers in the U.S.

“Facebook has become a daily destination for hundreds of millions of people,” Thomas Gewecke, President of Warner Bros. Digital Distribution, said in a statement Tuesday. “Making our films available through Facebook is a natural extension of our digital-distribution efforts. It gives consumers a simple, convenient way to access and enjoy our films through the world’s largest social network.”

Facebook hasn’t announced any plans to launch a paid video service of its own, and the “Dark Night” use indicates that, at least for now, it prefers to just allow other companies to use its popular platform to set up their own virtual screening rooms, with Facebook taking a cut of sales.

In a statement, a Facebook spokesman said that more than 400 games and apps use Credits to “give people a convenient and safe way to buy virtual and digital goods on Facebook.” He emphasized that Credits is “open to all developers” and that the company was “looking forward to seeing the new and interesting ways that developers and partners use credits to offer virtual and digital goods in the future.”

Beyond the “Dark Knight” rental app, which uses Warner’s own video streaming technology, Facebook itself is becoming an increasingly popular site for uploading and streaming video. In January, Facebook.com was the sixth-most popular video site in the U.S., with 42 million viewers and an average of 15.4 minutes per viewer, according to comScore Inc.

So far, Facebook has done little to directly monetize the videos it serves itself. There are no ads before or after such videos, aside from the display ads that already appear along the right-hand side of the site. Aside from user-generated content, Facebook is a popular destination for sharing music videos.

Facebook has a team of executives that work on partnerships with media companies, which so far have mostly involved integrating social sharing capabilities into media sites.

Some analysts on Tuesday said that Facebook could evolve into a serious competitor for Netflix Inc. and other online video services.

Steve Swasey, a spokesman for Netflix, said that “we’ve said for a long time when you have a big growing market there will be competition.” He added, “we are pleased with the growth and the consumer excitement around Netflix for streaming.”

In January, Netflix pulled back on its own tie-up with Facebook, which had let Netflix users share film ratings on Facebook. The company said that it is retooling the service, but didn’t give details.

Netflix has become the dominant player in home video rentals, offering unlimited one-at-a-time DVD rentals by mail for $9.99 a month or instantly streamed movies via the Internet for $7.99 a month. The service offers online registration via Facebook.

But faced with the prospect of new competition in the digital-video market, Netflix shares were down about 4% in Tuesday afternoon trading. Netflix shares, which have nearly tripled over the past year, have tumbled nearly 20% over the past few weeks. The rough patch largely coincides with the launch last month of Amazon.com Inc.’s own subscription-movie and TV-streaming service.

Other companies, including Apple Inc., Google Inc. and Hulu LLC, have also invested in online-video services amid the rise of digital media. Hulu is a joint venture owned by News Corp., Walt Disney Co., Comcast Corp.’s NBCUniversal, Providence Equity Partners and Hulu employees. News Corp. is the owner of Dow Jones, publisher of this newswire.

Meanwhile, Coinstar Inc. could also take a hit as its Redbox DVD kiosks face increasing competition. Redbox generally charges $1 per night for discs, but viewers physically need to rent those DVDs as Redbox doesn’t offer a streaming service, a strategy it may need to overcome as the popularity of streaming heats up.

“The Dark Knight,” the movie that Facebook is starting with, isn’t currently available from Coinstar kiosks or Netflix’s streaming service.

A Coinstar spokeswoman said it generally focuses on renting new releases.

Coinstar shares on Tuesday afternoon were down 3.5% at $43.

The Facebook initiative is part of a broader push by Warner Bros., part of Time Warner Inc., to create more legitimate ways to see its movies online. Last month, Warner began selling applications for the iPhone and iPad that let buyers watch “The Dark Knight” or “Inception,” along with bonus features. The “app editions” of the movies, both made by director Christopher Nolan, cost about the same as the movies do on the iTunes Store. Notably, however, the app editions are available in several territories, including China, Brazil and the Netherlands, where iTunes doesn’t sell movie downloads.

Facebook Users to Get Warner Bros. Movies – WSJ.com