Warner Bros to offer movies through Facebook

Tue Mar 8, 2011 4:17pm EST
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By Alexei Oreskovic

SAN FRANCISCO (Reuters) - Warner Bros is making some of its films available on Facebook, opening up a new revenue source for the Internet social network and signaling new competition for online entertainment companies.

Consumers can pay for the movies using Facebook Credits, a virtual currency so far used mainly in social games on the site, according to Warner Bros, a unit of Time Warner Inc, on Tuesday.

Facebook, which makes money mostly through online advertising, takes 30 percent of the revenue from sales by third parties on the website using Credits.

The service will initially be available in the United States, the company said.

The streaming of full-length Hollywood films on Facebook creates a new role for the 500-million-plus member social network, which has grown into one of the most powerful Web players by making it easy to share photos, videos and other content with friends.

In a note to investors on Tuesday, Goldman Sachs analyst Ingrid Chung said Facebook represents a long-term threat to online rental service Netflix Inc that caught Wall Street investors by surprise.

"The 'wisdom of friends' could be a bigger driver of movie viewership than the 'wisdom of crowds,'" wrote Chung.

Shares of Netflix closed 5.8 percent lower at $195.45 on Nasdaq.   Continued...

<p>The Facebook logo is shown at Facebook headquarters in Palo Alto, California May 26, 2010. REUTERS/Robert Galbraith</p>