Will Facebook nullify the Netflix-effect threatening Hollywood?

With the electronic audience emerging king in an age dominated by social media and internet, the film industry is struggling to survive by conventional means. As the online video-rental service Netflix emerges to dominance in both audience and content, Hollywood is scheming to hit back. The weapon was seldom as potent: social media and what better than Facebook.

Until recently, the film industry perceived Netflix as a small service that captured the fancy of a niche audience. However, over the past few months the tables have turned as the video-rental service managed to amass audiences and exploded in popularity. In the year leading up to December 2010, Netflix recorded 66 percent growth in subscribers. Now, the company boasts of 20 million subscribers and 'sought-after' content on over 200 internet-based platforms and devices like Xbox 360 , iPad, Blu-ray players, PS3, and Wii.

Threatened by the unforeseen growth of Netflix, Hollywood has now raised a war cry. To prevent a iTunes-like domination by Netflix, the film industry seems to have plotted to keep top-of-the-crop blockbusters from the service. Choosing a weapon operating within the same medium, a massive Hollywood studio set the path by introducing Facebook into the battleplan.

Warner Bros. has inked a deal with the social networking site to begin streaming the latest Batman hit 'The Dark Knight' directly. On Monday, the studio declared itself the first to offer movies directly on Facebook. Users can rent the film by going to its official Facebook page and hitting a 'rent' icon. The social media movie service is priced at 30 Facebook Credits, or $3. Users have 48 hours from the purchase to watch the movie. Full screen viewing can also be paused and resumed while Facebook retains its full functionality.

Making our films available through Facebook is a natural extension of our digital distribution efforts. It gives consumers a simple, convenient way to access and enjoy our films through the world's largest social network, Thomas Gewecke, president of Warner Bros. Digital Distribution is quoted as saying in media reports.

Analysts were quick to identify Warner Bros.' move as a salvo targeted at Los Gatos' Netflix Inc.

However, Gewecke sought to clarify that the studio wasn't after Netflix, asserting that Warner Bros. was interested only in the estimated global audience of 600 million on Facebook.

It's taking advantage of what we think is a great opportunity to make our movies available to fans, Gewecke asserted.

While the test is only currently available in the United States, the president of Digital Distribution said Warner plans to make movies available for download and purchase through Facebook. The studio may also bring in TV shows into the social media platform.

Despite how Warner Bros. rationalizes it, now with Facebook in the scene, observers are wondering if the social networking site can nullify the video rental service's threat to Hollywood. The rise of Netflix is often attributed to the fall of Blockbuster, the massive video-rental chain that set up a mail-delivery service in 2004. During its emergence as the sole winner in the DVD-by-mail business, the company also thwarted competition from the mighty Walmart. But now the questions that arise are: Will Netflix face the same blow it dished out to Blockbuster from Facebook? And will the social media site consequently aid Hollywood's assault against Netflix?

The answer to these questions can only come from Facebook and be measured by the likelihood of the company signing Warner Bros.-like deals with other movie and television show distributors.