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Facebook shows first move towards video social networking tie up

Cinemas everywhere shake as Facebook chances its arm at replacing them

By PETER WHITE

Published: 10 March, 2011

READ MORE: North America | US

Now that Warner Brothers has made a number of its films available on Facebook, it's just a matter of time before every other film-maker on the planet jumps on the same bandwagon, and Facebook becomes a credible video alternative, certainly to YouTube, definitely to Amazon, but even more scary, to Netflix.

Facebook remains hip and has a grip on every age-group, not just a small spattering of the social milieu. It has no history of allowing piracy on its web pages, well not mass piracy, and it has more web traffic than everything except search engines, and more internet hours than any site.

And ready made with this new move is a new business model, pay per view using Facebook credits - credit that had previously been used entirely in social games on the Facebook website. Hey it's even got its own universal currency. Effectively this is video on the same basis as iTunes - Facebook takes a 30% slice of all revenues using Credits, and of course keeps all the ad revenue - again same as iTunes. It's unclear at this time whether or not the films can be streamed and halted at leisure and continued on other devices, but if so, that's a powerful pure web delivery mechanism.

Initially, as is always the case, the US will be Facebook's proving ground, but unlike many social networking sites Facebook is freshly international and will be able to internationalize this just as soon as rights are cleared.

To us at Faultline, we see Facebook as the natural place to introduce not old films, but new ones, and this could migrate rapidly to being the online equivalent of a first studio weekend, with invites going to hundreds of Facebook groups and millions of Facebook members, to view fresh releases. We would expect some way of sharing the films, or scenes from them and putting them on walls etc... to come as part and parcel of the service once it is released and fully developed.

So far Facebook only allows non-commercial content such as photos and private videos, and will need to enact copyright protections so that video uploads are not commercial.

This week US papers, including Forbes, said that Goldman Sachs analyst Ingrid Chung thinks Facebook represents a long-term threat to online rental service Netflix, which we entirely agree with. It's tough at this point to see what stage the Facebook plans are at, but if it's taking video to Facebook users, you can bet it has a plan of what it would "like" to do, and now it's just a matter of it seeing how the Facebook public like the idea. The experiment allows users to view a relatively old film, "The Dark Knight" on a 48 hours rental, at 30 virtual Facebook Credits, around $3. To take on Netflix it would have to offer a subscription service and offer 20,000 films. But with 500 million live accounts compared to Netflix's 20 million, there must be room to introduce this later.

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