With movies, Facebook looks to outgrow its niche

Social network tries new angle to compete with Google, dominate the Net

Facebook, as widely popular as it is as a social networking site, is looking to break out of its niche. In doing so, it would like to take a defensive swing at Google.

Industry analysts say Facebook took that step this week, with a little help from Warner Bros. Entertainment.

Warner Bros., a giant in the movie business, has begun offering movies to rent or buy and view on the Facebook site. The program, which launched in a test phase in the U.S. on Tuesday, requires users to pay $3 for the movies using Facebook's on-site currency, called Credits.

The Batman film, The Dark Knight, was the first movie available on Facebook. Users can rent the film through its official Facebook Page . Other movies are scheduled to be made available on Facebook in the coming months.

For a company that has quickly become the largest social network in the world, why venture into the movie-viewing business?

Ezra Gottheil, an analyst with Technology Business Research, said it's all part of Facebook's plan to become not only an online destination, but also a portal to music, movies and politics. It's also another way for Facebook to pull in more advertising and revenue.

"This is all upside for Facebook," Gottheil said. "Facebook would like to be users' entry point to the entire Web -- communications, content, game-playing, etc. As long as additions don't obscure the primary experience, and I don't see any reason this would, every addition removes one more reason to leave Facebook World."

This, according to Gottheil, is all part of Facebook's progression.

"This is another step in Facebook's evolution from purely people-centered social networking toward both a people-centered and content-centered site," he added. "Many things Facebook has done contribute to this trend, but every addition strengthens their position."

Rob Enderle, an analyst with the Enderle Group, said Facebook's latest move also is a defensive swing against Google, which is increasingly becoming a rival to the social network.

"I think [this movie deal] could be critical if Facebook is going to move out of its niche and go after the broad [advertising] market in general," Enderle said. "It is as much a defensive move against Google, which is already in the media space but has struggled with social networking... They want to get Google chasing them."

While there's been a lot of attention on the competition between Google and Microsoft, there's been a growing rivalry between Google and Facebook in the past six months. Both companies are top in their fields and perhaps most importantly, both want to dominate the social Web.

While Facebook is the early leader in the social Web, Google is rumored to be working on its own social network to go head-to-head with Facebook.

With Facebook getting a $500 million investment earlier this year from Goldman Sachs and a Russian investor, several analysts have speculated that company executives might use that newfound cash to go after Google.

"We are seeing the beginning of a major market inflection point," Enderle said. When the dust clears, a few companies won't be around and we may have a couple of new power players... If [Facebook] pulls this off, it will be textbook brilliant."

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin or subscribe to Sharon's RSS feed. Her e-mail address is sgaudin@computerworld.com.

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Sharon Gaudin

Computerworld (US)
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