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Warner Bros. announced earlier this week that it will be adding five high-profile movie titles for rental and streaming via Facebook including “Harry Potter and the Sorcerer’s Stone,” “Harry Potter and the Chamber of Secrets,” “Inception,” “Life As We Know It” and “Yogi Bear”. In early March, the studio had announced it would begin testing digital movie rentals via Facebook with “The Dark Knight.” The movie can be accessed through the official Facebook Fan page, where fans can “rent” the movie using Facebook Credits (cost is 30-40 Facebook Credits per rental or $3-4). Viewers have 48 hours to watch the movie. While watching the movie, consumers will also still have full Facebook functionality -- including the ability to post comments, interact with friends and update their status.

Why is this important? There’s a lot of speculation this could shift the balance of the digital media distribution business for films. In the current landscape, online movie sales/ rentals are dominated by services like Apple’s iTunes, Netflix, Amazon and a host of others. Netflix shifted its highly successful DVD delivery business in recent years to a hybrid model due to higher demand for digital viewing of films.

According to Netflix, more than a third of new subscribers are signing up for their streaming-only plans. Streaming content online is clearly the growth opportunity for Netflix and other services. Facebook’s test with Warner Bros. has these companies nervous in the long run. They obviously have the depth of titles that Facebook doesn’t currently have but what they don’t have is the social network’s immense reach.

Facebook has become a daily destination for millions of people – whether it’s updating their statuses, checking what their friends are doing or sharing information and content. There are over 500 million active users with 50% of them logging on daily. On a monthly basis the average user creates 90 pieces of content, with more than 30 billion pieces of total content shared. Netflix and other services may have the titles, but Facebook allows consumers the arena to not only watch the films, but immediately share information about it.

This is a win/win for the movie studios. They can release select films to Facebook, giving them access to another distribution channel. The studios also gain by using Facebook as a source of earned media since users will make comments/recommendations about movies they watch streaming on Facebook to their friends (average Facebook user has 130 friends). Those friends can then become a fan of the movie’s Facebook page and rent the movie and recommend to their friends and so on and so on…

We all know Facebook is going to get more movie titles to stream, so why doesn’t Netflix nip this problem in the bud (before it starts to become a serious problem for them)? Netflix has the depth of movie titles (over 20,000 titles available for streaming) and Facebook has their immense user group. The Netflix Facebook page has about 800,000 fans, but compared to Facebook’s 500 million + user group, that’s nothing. I think Netflix needs to make a date with Facebook real soon!

As Director of Entertainment Marketing, Josephine will be responsible for developing branded marketing platforms for clients including Unilever, Kraft, and other new business opportunities. She can be reached at josephine.son@ogilvy.com.

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