Facebook Helps Sell Digital Media with Credits: Challenges and Opportunities

Today Warner Brothers announced that it will begin renting movies to users through Facebook applications, starting with The Dark Knight. By allowing users to pay for digital content, not just virtual goods, with its virtual currency Facebook Credits, Facebook is moving in a bold new direction that encroaches on the territory of iTunes and NetFlix.

However, Facebook users aren’t accustomed to consuming long-form content on the site, and Facebook historically hasn’t been optimized for this kind of user experience. Though Facebook’s enormous audience gives it some advantages, it will have to overcome numerous challenges to become a viable competitor to established content distributors and begin collecting its 30% fee on Credits spent on content sales.

The Warner Bros. promotion allows users in the US to visit The Dark Knight Page, use an application, and pay 30 Facebook Credits (USD $3.00) to gain access to the film for 48 hours. Users can watch full-screen, pause, resume, fast-forward, and rewind the film at their leisure. If they leave Facebook, they can return within the 48-hour period and resume watching by clicking the “Watch” tab on the film’s Page or the bookmark for the app in their home page’s left sidebar.

When not in full-screen mode, users can use Facebook Chat, a Facebook Like button or a Twitter button to share news of their experience with friends. The viewing application is intuitive and the film buffers almost instantly when fast-forwarded. While it hasn’t been tested at large scale, if users want to sit down and watch a full film on Facebook, the current experience is smooth and enjoyable

Advantages and Challenges to Becoming a Content Distributor

Though Facebook founder Mark Zuckerberg initially imagined that Facebook could allow users to access media, albeit illegally via his application Wirehog, the Facebook interface has evolved as a social network, not a content library.

Users are accustomed to frequent, short visits and rapid browsing, not staying on a single screen for any extended period of time. Therefore, it may be difficult to get them to sit still and watch a feature-length film, even in segments. The Facebook navigation bar present at the top of the window when not watching full-screen may make users restless, reminding them that compelling news about their friends is always just a click away.

Content management is also an issue. The Facebook application bookmark system is designed to surface your most frequently used apps, and hide the rest below a “more” fold. There’s no way to sort your apps, even alphabetically, so finding a specific film amongst an unruly list of games, apps, and content is a chore. Once a rental expires, its bookmark will likely remain, cluttering the menu.

To attract content producers, such as film studios and record labels, and increase sales, Facebook would also need to provide an effective content discovery system. It has great data to facilitate this, as it could employ the Likes and app usage of a user and their friends to power recommendations. Facebook released such a discovery engine for Pages this summer, though neither it nor its Apps Directory are especially well-designed nor drive much traffic.

Facebook does have some inherent advantages if it chooses to promote itself as a content store. Its nearly 600 million person audience, as well as the built in marketing and viral channels, are attractive to content creators, as evidenced by the large number of Facebook Like buttons and deeper Facebook integrations present across the web.

While Apple currently has a lot more user credit cards already on file, Facebook’s browser-based interface could one-up iTunes, which requires users to be on an Apple device or clumsily authorize another device that has the iTunes application installed to be able to access their content. Facebook users could easily log into a public computer or a friend’s device to begin interacting with or purchasing content.

For now, Facebook doesn’t seem to be taking an overtly active role in this early content distribution trial, simply allowing Warner Bros. to operate within the guidelines of the Platform. There’s nothing stopping other content producers from creating their own similar apps as an additional distribution channel to more established content stores. In fact, if content distribution on Facebook by third-parties became popular, and user were eager to consume content on the site, it could become a significant new revenue source for the site, the way social games have.