Holy Misleading Conclusions, Batman! The Facebook Netflix-Killer That Wasn't

This morning, news broke that Warner Brothers had begun a test on its Facebook Page wherein it’s going to allow users to rent The Dark Knight for 30 Facebook Credits (which translates to $3). It’s apparently the first time a movie studio has offered a full-length movie for rent on Facebook, and boy, does it have people in a tizzy.

The Hollywood Reporter quotes a Goldman Sachs analyst as saying, “Facebook represents a new potential entrant that few in the investment community were concerned with prior to this announcement, so we believe it does indeed represent an incremental negative for Netflix shares.” And PaidContent says that the new partnership has led to a big drop for Netflix’s stock (it’s down 5.76% on the day).

Unfortunately these reports of a new Facebook movie initiative, which is supposedly going to compete with Hulu and Netflix, are completely misleading. Facebook doesn’t actually have a partnership with Warner, nor is it launching a movie rental service. Oops.

The reality is that Warner Brothers built an app on Facebook’s Platform, just like thousands of other developers have in the last few years. Yes, the application uses Facebook Credits for rentals, but any developer can now sign up for the payment service. In other words, Netflix can breathe easy. I’m hardly the first to notice this — fellow tech reporters Caroline McCarthy and Eric Eldon have already tweeted about it, and there are numerous articles that don’t misinterpret the extent of Facebook’s involvement with the Warner announcement. Here’s Facebook’s statement on the matter:

“Right now, more than 400 games and applications use Facebook Credits to give people a convenient and safe way to buy virtual and digital goods on Facebook. We’re open to developers and partners that want to experiment using Credits in new and interesting ways, and we look forward to seeing what they come up with.”

As for all those who were initially worried that this spells Netflix’s demise — I’m wondering if they actually tried watching The Dark Knight on Facebook. Because the experience isn’t that great. Netflix and Hulu have built their services around content viewing and discovery. Facebook has an application platform, but it’s very difficult for companies to build an app within Facebook that’s nearly as immersive as these dedicated service. Which is why Facebook offers Facebook Connect… which Hulu and Netflix both integrated years ago.