Facebook took some air out of the Netflix balloon when it announced its own movie streaming media service Tuesday. Working with Warner Brothers Digital Distribution, Facebook is testing a video service that will let users rent movies for $3, or 30 Facebook credits.
The first installment of the trial is the 2008 Batman movie The Dark Knight, and users can have access to the rental for 48 hours. The move was not welcomed by Netflix investors who see Facebook’s 600 million-member social media site as a formidable challenge to company’s $8-a-month video streaming efforts.
Netflix shares fell more than 4% to $199.30 in early trading Tuesday. Given Facebook’s immense reach and the apparent ease at which it can keep users on the site while they watch movies, the move certainly threatens the Netflix model. Not only does Facebook give the studios access to its vast membership, it can also deliver advertisers a big group of consumers with shared interests.
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Credit: Bob Hetherington