Netflix, Inc. (NASDAQ:NFLX) and Facebook Inc (NASDAQ:FB) are teaming up to make movie watching more social. The partnership makes a lot of sense and could help both companies cement their industry leading positions. It also makes Facebook’s business prospects look a little more desirable.
Netflix, Inc. (NASDAQ:NFLX), which started as a mail based dvd rental service, made a prescient switch to online video delivery. At that moment, the way in which people interacted with video began to change. The company didn’t stop there.
More recently, facing increasing costs for video content, it set out to create its own television shows. Lilyhammer, Netflix’ first effort, was a testing ground that was used to launch House of Cards. The second series, which featured popular actor Kevin Spacey, was promoted with much greater fanfare. Netflix CEO Reed Hastings, not one to hold back, even suggested that House of Cards was going to hail the advent of Internet TV.
Facebook Inc (NASDAQ:FB) has been similarly disruptive to the normal way of doing things. While it isn’t the only social network out there, it is easily the most populated social network. The huge benefit that Facebook offers is connecting with friends and family, both quickly and frequently.
The company, however, has had a hard time turning its vast network of customers into a a vast revenue stream. While games played on Facebook have been a big hit, and revenue source, advertising is the holy grail that investors want to see the company crack. The only problem is that customers don’t want the company to share too much of their private information or see ads impede their Facebook experience.
Things People Share
A connection between these two companies makes a great deal of sense. People like to share their media watching experiences with others, recommending and panning movies and shows as gleefully as they share gossip. Thus, customers of both companies will likely find this partnership a fun and desirable change.
Longer term, however, it has even greater potential for both companies. For example, not too long ago Facebook Inc (NASDAQ:FB) introduced Facebook Credits. This currency substitute allows customers to make in-game purchases. However, Facebook has envisioned a day when it also allowed customers to purchase video content, such as movies and television shows.