• by Steve Smith , Staff Writer @popeyesm, March 9, 2011

Warner Bros. Dark Knight shook up the media world yesterday, along with a few Netflix stockholders, about as easily as the caped crusader himself rattles street hoods. Launching a pay-per-view rental plan for its Chistopher Nolan flick on Facebook, Warner Bros. seemed to be re-jiggering what was an already-changed game of digital film distribution. If Facebook becomes a principle purveyor of film playback then what are the implications for category leader Netflix? Well, for the day it meant a 5.76% stock drop. Netflix has 20 million subscribers and until now has been the king of digital film distribution. Facebook doesn't even cite a precise count anymore. It's last update of 500 million users is already stale, but even a fraction of that reach means that any of its moves into a new market can shake things up.

Could Facebook eat Netflix? Well, maybe in theory. Someone is going to have to make that interface a bit more hospitable to lean-back movie going, though. I rented Dark Knight via its Facebook.com/darkknight page. The experience was like all content consumption on Facebook - something less than ideal. I admit I find the Facebook layout as geeky and tedious as one of Zuckerberg's Sorkin-fueled monologues in "The Social Network." The process of buying a 48-hour access pass to Dark Knight was easy enough with the 30 credits I had on hand ($3.00). Facebook's tri-column structure doesn't allow for much flexibility in the viewing window, however. Let's be clear. This is no hulu, with an optional pop-out box. And don't look for much in the way of resolution here. When I went from small screen to full screen (the only two options) the wonderfully pristine visuals of Nolan's film were muddy and underwhelming. Worse, the player didn't track my place. Even when I paused, after a couple of minutes the playback would reset to the start. When I dropped out of the film and returned I was rewound to the beginning, too. None of the content memory that makes Netflix feel so seamless and accommodating was here. No scrubber bar for finding scenes. And even though the site itself has millions of "likes," the actual film viewing experience had only 325 when I watched.

Yeah, all of this can be fixed, if Facebook decides it is a content distribution company that can accommodate multiple kinds of user experiences. Which is not to say that the social network effect on Facebook isn't enormously promising for film distribution. The Dark Knight Facebook page has nearly 4 million "likes." Being able to see what your friends are watching and make recommendation gives studios an amazingly powerful engine with which to market and merchandise. Imagine if film marketers could incentivize content sharing with discounts or group buying advantages? And for Facebook the payoff is incredible, on both the direct e-commerce side and advertising. Now studios have a strong reason to advertise on the social network. They have a mechanism for driving consumers directly to a sale. And all of this is being done in a context where ROI is direct, highly measurable and demonstrable. 

But before I would sell off any Netflix stock, I think I would wait for Facebook to decide it really can be a virtual movie house along with all of the other things it aspires to be.