Holy f-VOD Batman!  iTunes and Netflix have just been disintermediated by Hollywood.  Warner Brothers is rolling out an ‘f-VOD’ (Facebook Video On Demand) service on movie fan pages, selling direct to fans via Milyoni’s f-commerce software. Starting with Batman blockbuster The Dark Knight for the 4m Facebook fans of the movie. $3 of Facebook Credits gets you 48hrs of movie access direct from the fan-page.  Bye bye Netflix, hello Faceflix.  Indie film site Fandor is looking to offer a similar Facebook streaming service.

A headline-fuelled knee-jerk market reaction wiped  $650,000,000 off Netflix stock (6%)…

Whilst we believe the initial market reaction was more than slightly mad; Facebook VOD from Hollywood Studios is not going to disintermediate Netflix (or any other subscription-based service with a big browsable catalogue anytime soon – especially one that is working on “extensive Facebook integration”), nevertheless this is BIG news in social commerce.   Why?

  • First, whilst it’s not strictly new news, it is proof of concept that Facebook can be used as a scalable application platform to deliver premium digital content to fans, with all the social piping that comes with Facebook.  So you make margin with your best customers, and turn these fans into advocates – ‘fan magnets’ who effectively act as a volunteer sales force (watching movies on Facebook is a ‘social action’ that gets posted to all friends’ walls). Sexy.  Think of the possibilities of Facebook as a digital distribution platform; a VIP zone on your Facebook page offering paid-for live-streaming of product launch events, fashion shows, user guides, video reviews, webinars for B2B, educational courses… You’ll even have the opportunity to make advertising revenue by embedding partner ads in your video stream.  Super-sexy.
  • Second, it’s an open platform – no partnership with Facebook needed.  Team up with your f-commerce solution provider and hatch a cunning plan – Warner have gone with Milyoni to create an innovative f-VOD solution that offer premium paid-for content to site fans to make margin and activate advocacy.
  • Third, it uses Facebook Credits – oh the beauty of the ‘Pay with Facebook’ button – easy, secure and integrated.  Bought in-store, by PayPal or with a credit card, Facebook Credits are likely to go mainstream as Facebook makes a big push promoting them this year as the Net’s most convenient currency of choice - for example, Credits become compulsory for micro-transactions in Facebook games from July. The Next Web is bullish about Credits becoming a global currency, and Facebook a global bank, but whatever else they do Facebook Credits will help reduce the psychological hurdle of getting customers from conversation to commerce on the network. Of course, Facebook takes healthy commission, up to 30% (like Apple on the app store) on Credit purchases, so they’re best suited to digital products or for real products in a VIP store where the goal is to activate fan advocacy and accelerate launch sales by getting the product into their hands and on their lips (as opposed to volume retail).
  • Fourth, if Hollywood is using Facebook as a ‘Direct to Fan’ e-commerce platform, then this can only lend credibility to Facebook as a specialised sales channel and the logic of the argument of ‘fish where your fans are’ (on Facebook, not your site or store); we’re likely to see an acceleration in the adoption of f-commerce
  • Fifth, Facebook is evolving; today Facebook may simply be the take-it-or-leave-it #1 site on the Net, and the world’s favourite social networking service – but it is evolving something much more, even if we don’t quite know what that something is – an application platform (there are over 500K apps on Facebook), advertising platform, digital distribution service – and/or retail platform

The opportunity, as we see it, for f-VOD services such as Warner’s prototype is to integrate usefully and engagingly with the social plumbing that comes with Facebook (that and increase the volume level, and allow bookmarking to return to favourite bits); the current offer makes little use of social features other than turning viewing movies into a social action that creates organic content by getting syndicated across the network.  By adding a social layer and a social rationale (word of mouth) to the service, f-VOD could be a disruptive service not only in f-commerce, but in the video delivery industry itself.