Eden Zoller, Principal Analyst, Ovum
AUSTRALIA: Warner Bros is testing a new video rental service on Facebook, the first time a major media player has done so with a social network, a deal we believe precedes a more concerted move by the social network into video services and web TV.
A Facebook video/ web TV service does not exist at the moment but it is likely to do so in the near future and is a logical next step in the network’s growing service portfolio.
Facebook is rapidly evolving beyond its core communications focus to become a wider platform for distributing and consuming entertainment services, particularly in games. At the same time an increasing amount of online video viewing time is on social platforms, notably YouTube but also Facebook albeit to a lesser degree.
Facebook brings compelling attributes to video and web TV distributed on its platform. It would immediately mix the social and TV in a way that would be interactive and viral, drawing on its thriving developer community to enhance the proposition further with attractive applications.
Facebook is also building a strong mobile presence and this would inevitably inform a video and web TV offer from the company. Advertising has bedded down on Facebook but it also has a payment system in place for premium content thanks to the Facebook Credits virtual currency, which as per the Warner Bros deal, provides content partners with the option of premium services.
These factors, combined with Facebook’s large, highly engaged user base of around 600 million members, will make it a very attractive distribution platform for video and TV services. Warner Bros will be the first of many partners in this area. It will also no doubt give established online video rental and distribution platforms like Netflix cause for concern.