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Home Entertainment's Old Face and New Face Share the Headlines

9 Mar, 2011 By: Thomas K. Arnold

Charlie Sheen's antics aside, entertainment news this week is dominated by a most interesting juxtaposition of the old face and the new face of the home entertainment business.

Blockbuster, for years the 800-pound gorilla of our business back when rental ruled, has been reduced to a feeble old spider monkey in the zoo infirmary. A trustee representing the Department of Justice is leading the charge to ask the court to force the bankrupt rental chain to liquidate its assets. Summit is suing Blockbuster over allegedly unpaid bills, while a Google News search this very morning found a rash of negative headlines, including "Blockbuster files notice of possible layoffs of 850 Dallas and McKinney employees," "Two of three [Racine, Wisconsin] county Blockbusters closing," "San Luis Obispo's Blockbuster video store to close April 10" and "Former Norwich Blockbuster to become bar and grill."

Down for the count? It's beginning to look that way.

Meanwhile, a fresh new face suddenly has emerged in the beleaguered home entertainment sector: Facebook, the social networking site that's made everyone's life a reality show.

Warner Bros. Digital Distribution yesterday began offering movies for purchase and rent on its Facebook movie page. Fans who “like” The Dark Knight will be able to use their Facebook credits to rent the title for 30 credits or $3. Currently, only U.S. consumers can rent movies. Warner plans to add more films in the coming months, with a purchase option promised as well (for the full story, click here).

The development prompted analysts to scramble over one another to proclaim Facebook the Next Big Thing in home entertainment. In a Financial Post story (click here to read it), Eden Zoller, principal analyst with Ovum Plc, said jumping into the nascent digital delivery sector of the home entertainment business is a "logical next step" for Facebook.

"A Facebook video/Web TV service does not exist at the moment but it is likely to do so in the near future and is a logical next step in the network’s growing service portfolio," Zoller said. "Facebook is rapidly evolving beyond its core communications focus to become a wider platform for distributing and consuming entertainment services, particularly in games. At the same time an increasing amount of online video viewing time is on social platforms, notably YouTube but also Facebook albeit to a lesser degree."

I don't think Zoller's too far off. Facebook already lets users upload and share video clips a la YouTube. The site is developing a strong mobile presence. And with the launch last year of Facebook credits, a virtual currency that at this point has a use limited to social games and the purchase of virtual gifts, the proverbial stage has been set.

As the Financial Post story pointed out, "Extending the use of Facebook credits to include access to premium content such as movie rentals will not only help Facebook achieve its goal of having sales of Facebook credits account for one-third of all revenues, but it also will help validate arguments of the virtual currency being the world's first truly global currency."

Zoller sums it up quite nicely. "These factors, combined with Facebook’s large, highly engaged user base of around 600 million members, will make it a very attractive distribution platform for video and TV services," he said. "It will also no doubt give established online video rental and distribution platforms like Netflix cause for concern."

Food for thought, certainly.


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