Few saw this one coming. Facebook just inked a deal with Warner Bros. that could lead to a showdown with Netflix. In fact, Netflix stock dipped four percent on the news that the social networking giant is entering its space.
But Facebook has seemingly been laying the ground work for years, most recently with its Facebook credits. In the Warner Bros. deal, Facebook will offer its users a chance to stream “The Dark Night” from its platform for 30 Facebook credits — that’s equal to $3 — for a 48-hour period. Warner Bros. promised more titles for rent in the months ahead.
“Facebook has become a daily destination for hundreds of millions of people,” said Thomas Gewecke, president of Warner Bros. Digital Distribution. “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.”
The Facebook deal comes at the heels of Amazon’s announcement that it would offer about 5,000 movies and TV shows to its Amazon Prime members at no additional charge. The move could woo some Netflix subscribers to the bookseller’s court.
For its part, Netflix has more than 16 million members in the United States and Canada and is making inroads into the living room with its place on video consoles, set-top boxes and remote controls. But it may not be enough in the long-term to ward off the social networking behemoth.
“Facebook’s foray into pay-per-view does not impact our Netflix estimates,” said Ingrid Chung, an analyst at Goldman Sachs. “However, Facebook represents a new potential entrant that few in the investment community were concerned with prior to this announcement, so we believe it does indeed represent an incremental negative for Netflix shares.”
If Facebook inks…