March 8, 2011 at 10:39 AM ET
Facebook is now offering the Batman film "The Dark Knight" as an experimental video-on-demand movie rental, via an app created by Warner Bros. It's a small move — one little film, already available everywhere else, for about the same $3 rental fee — but it has big ramifications.
It could pave the way for Netflix and Hulu to build apps that fit the social network, or it could further alienate them, another giant moving into their space. Speaking of giants, it is certainly a threat to Apple, Google, Amazon and Microsoft, each trying to reach home and mobile audiences with its own video approach. Since the $3 rental fee is taken in the form of 300 Facebook Credits, you can bet that whatever happens, Facebook is quite interested in getting a piece of the action beyond just advertising.
As Pascal-Emmanuel Gobry at Business Insider writes, "Facebook's overall business strategy is to have as much activity go through its social graph so it can take a tax on that activity (and give the businesses something back in return). Facebook is an amazing platform for games to go viral and in return Facebook takes a 30 percent cut of virtual credits plus hundreds of millions in advertising for games."
While, on one hand, it would seem that this approach would be good for Netflix or Hulu, which have done well creating apps for other platforms, the 30 percent cut is probably tantamount to strangulation. This is the same problem that music and video services are having with Apple's new in-app subscription policy, which mandates a 30 percent cut of subscription revenues made from within the app. Movie studios like Warner don't have the same problem, as they avoid the middle man, but as Gobry mentions, it's probably unlikely that Facebook wants to make a bunch of deals with each and every movie and music content owner.
As for Apple and the rest of the gorillas, Facebook is already becoming a nuisance. Horning in on the entertainment racket makes them even more of one, especially in the mobile space. You're not likely going to be able to rent movies (or play games) through a Facebook app running on an iPhone (and probably not on Windows Phone, Web OS or Android either). At what point in its growth does Facebook see a Facebook phone as a necessary next step.
Mark my words, one little movie on the great big social network may seem like nothing, but it is a spark of a much greater fire that's about to blaze.