You’ve probably already heard about Warner Brother’s experiment of distributing streaming content via Facebook. Although it’s an interesting idea, I don’t understand the strategy, at least as purported in the New York Times article on the subject:
“But Hollywood is also fretting that certain delivery systems — particularly Netflix, with its rapidly growing streaming service — are becoming too powerful. If Warner’s go-straight-to-the-fans Facebook experiment is successful, it could be a way of skirting those middleman distributors.”
I don’t understand this on many levels. The hostility of Warner Brothers towards middlemen streaming services such as Netflix seems especially strange. WB itself is a content distributor—funding their own productions or purchasing the movie rights of independent filmmakers and distributing their artistic vision to fans. Directors could, of course, cutout the middleman—Warner Brothers in this case—funding and distributing movies themselves. This however, is time consuming and results in huge opportunity costs to these auteurs since filmmakers are presumably less skilled at fundraising and media distribution than they are at making films. Studios then add value, benefiting both directors and viewers by creating works of art that otherwise wouldn’t be made or circulated. (I suppose WB view themselves as the good kind of middleman, not like the underhanded Netflix with its huge movie selection, recommendation engine, and unlimited streaming for $7.99).
Secondly, it is completely unclear how Facebook is less of a middleman than Netflix (aren’t both of these services a series of closely interlinked webpages distributing on-demand content to users?). And the insinuation that Netflix is somehow more powerful than Facebook borders on the absurd (compare Netflix’s market cap of $10.6B with FB’s $50B valuation by Goldman, a sure sign that investors are bullish about Facebook’s leverage to invade every aspect of our online—and real world—lives). While it may be true that Facebook has less film content currently available (the wonderful The Dark Knight being FB’s only film so far), loading the social networking site with more content and features only furthers its march toward being the Wal-Mart of cyberspace and seems completely antithetical to WB’s concerns of conglomerated power.
And while WB is also playing with direct distribution via standalone applications on the iPad, this too seems like a poor strategy. Netflix has a first mover advantage, garnering huge name recognition and a base of over 15 million users. Sure WB’s could try to choke off Netflix’s supply of New Releases, but this seems like a losing proposition. Either remaining studios will stick with Netflix, reducing WB’s effectiveness in its independent marketing approach, or online film distribution will fracture as studios compete to market directly to customers, resulting in inconvenience for customers.
On a personal note I find Facebook’s interface clumsy and unintuitive. The only way I found to watch The Dark Knight is to type the movie’s title into the search bar which led me to the film’s page. From there it was available for viewing. Sure, the engineers at Facebook will adapt the interface if more content continues to move in this direction, but I’m not at all confident that Facebook can integrate a movie search, recommendations, film synopsis, and a media player with anywhere near the polish of Netflix.