Will Facebook and Netflix be the next corporate power couple? The Washington Post reports that Netflix CEO Reed Hastings has joined the board of Facebook, effectively melding the power of the online and via mail movie subscription service with the largest online social network on the planet. Hastings joins Netscape founder Marc Andreesen, Paypal co-founder Peter Thiel and Washington Post Co. chairman Donald Graham on the Facebook board.
Changing how we watch TV and movies
Both Netflix and Facebook have compelling reasons to enter a partnership, according to various sources. CNet indicates that film and television studios like Warner Bros. have attempted to sidestep Netflix by approaching Facebook directly with offers to stream content. An alliance with Facebook may enable Netflix to keep its stronghold on streaming video online.
Meanwhile, Facebook may gain access to the Netflix user database, if not the other way around. This will afford Facebook CEO Mark Zuckerberg and company additional chances for revenue, as Netflix users who aren’t already Facebook consumers may be swayed by the lure of Facebook credits. Plus, Facebook’s user base showed less than normal growth in May at only 1.7 percent, so a new user infusion will be welcome.
Never discount market savvy
Zuckerberg looks forward to a partnership with Reed Hastings, the CEO of the most successful online streaming video company.
“Reed is an entrepreneur and technologist who has led Netflix to transform the way people watch movies and TV,” said Zuckerberg. “He has built a culture of continuous, rapid innovation.”
Hastings, who is also on the board of Facebook investor Microsoft, sees a great deal of forward momentum.
“Facebook is propelling a fundamental change in how people connect with each other and share all kinds of content,” Hastings said. “I’m looking forward to working with them.”
The fight for entertainment bandwidth
During peak periods of Internet use, Netflix.com consumes at least one-fifth of all U.S. traffic, as customers watch streaming content. This fact isn’t lost on the telecom industry, writes the Washington Post. Not only do studios consider Hastings’ creation a threat, ISPs who manage bandwidth are also wary.
Netflix has more than 20 million subscribers and remains wildly popular. This poses a threat to cable and satellite providers whose outdated price models are fast becoming obsolete. By partnering with Facebook, Netflix will only increase its influence.
Winklevoss twins drop Facebook lawsuit
UPI reports that Cameron and Tyler Winklevoss, who claimed in court previously that Mark Zuckerberg stole the idea for Facebook from them, have dropped their challenge of a $65 million settlement with Facebook that could have gone to the U.S. Supreme Court. The Winklevoss twins were awarded cash and a stock settlement in 2008 but had continued to pursue an additional $200 million from Facebook.
The 9th U.S. Circuit Court of Appeals ruled that the $65 million settlement would remain intact. Currently, the only suit that remains open between the Winklevosses and Facebook involve claims that Zuckerberg’s legal team kept key instant message conversations secret from litigation.
Connect the dots between Facebook, Wall Street, Warner Bros. and Netflix
Sources
UPI: http://bit.ly/jKmcDC
Washington Post on merger: http://wapo.st/mLDGmF
Washington Post on Netflix vs. telecoms: http://wapo.st/e7kUho
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