Video Privacy Protection Act Delays US Launch of Netflix Facebook Integration

The Netflix Q2 earnings report released today noted that the video rental and streaming company will soon launch a Facebook integration, but only in Latin America and Canada, not the United States. This because the Video Privacy Protection Act prohibits the disclosure of a citizen’s rental history and genre preferences without written consent. A bill that clarifies the law is currently under review that would legalize Netflix’s Faceboon integration in the US.

The VPPA apparently doesn’t apply to all-digital video streaming company Hulu, though, as it launched a Facebook Connect integration earlier this month that allows users to share their viewing history with friends. This may be because Hulu does not rent, sell, or deliver any physical media.

The law specifically prohibits those who rent, sell, or deliver “prerecorded video cassette tapes or similar audio visual materials” from disclosing personally identifiable information such as rental history or genre preferences to anyone without written consent or a warrant. Netflix’s letter to its shareholders (.PDF) explains that “Under the VPPA, it is ambiguous when and how a user can give permission for his or her video viewing data to be shared.” The VPPA-clarifying bill HR2471 might allow users to give consent digitally, such as through Facebook extended permissions.

Currently, Netflix’s website has no integration with Facebook or any other social media platforms — not even Like or tweet buttons. This may be be significantly hampering viral growth for the service. Facebook has still helped drive growth for Netflix, though, as subscriptions to the service are frequently found as an option on the offer walls of social games, allowing gamers to earn Facebook Credits, proprietary virtual currency, and virtual goods for signing up.

The launch of the integration in Latin America and Canada, potentially followed by a US launch pending the success of the VPPA-clarifying bill HR2471, could drastically boost virality, Facebook users could receive recommendations or even previews of content their friends are watching, leading them to sign up for a subscription in order to view that content immediately.

This would support Netflix’s long-term strategy of pushing its customers towards streaming and away from shipped DVDs. Facebook would likely help promote the integration, as Netflix CEO Reed Hastings sits on Facebook’s board.

We imagine the Netflix Facebook integration will be similar to Hulu’s. It might allow users to see a feed of what their friends are watching, leave comments on videos that friends can see and which are also syndicated to Facebook, and share either news of their viewing habits or actual video clips of what they’re watching directly to Facebook. It could also have Netflix-specific features such as allowing users to share their DVD shipping queue with friends, or even make a collaborative queue.

Even if HR2471 passes, Netflix will have to be very careful about how it handles privacy. If it can offer clear, simple to use but granular privacy controls behind social features that improve content discovery, it may be able to turn some of its 25 million subscribers into Facebook evangelists.