Warner Bros. tests film rentals on Facebook

Warner Brothers became the first major media company to offer a movie for rent on Facebook, a move that could position the social network to become a force in the digital distribution of movies, rivaling services like Netflix and iTunes.

Warner said yesterday that it would allow Facebook users in the United States to rent the film The Dark Knight directly on the social networking site, and pay for it using Credits, Facebook’s virtual currency. If other studios make similar moves, Facebook could tap a significant revenue stream, bolstering its Credits currency as it seeks to create a rival to PayPal and other payment systems.

Warner said it might make other movies available on Facebook over time.

“This is definitely a test,” said Thomas Gewecke, president of Warner Brothers Digital Distribution, in a telephone interview.

While some analysts saw the move as a danger to Netflix — a threat investors seemed to take seriously as shares of Netflix dropped more than 5 percent yesterday — others said that for Facebook, which is already one of the most popular places to watch videos online, the payoff from Warner’s move might be more in the expansion of its online currency.

“I think this is much more about payments than about movies,” said Alex Rampell, the chief executive of TrialPay, an advertising company that offers free Facebook Credits to people who buy certain products.

Mr. Rampell said that millions of Facebook users were using Credits to pay for virtual goods inside games like FarmVille and Mafia Wars. “It seems like a logical step to use the currency to pay for movies,” he said.

Facebook began testing Credits in virtual games nearly two years ago. But the company, which keeps 30 percent of all transactions conducted through Credits, has made it clear that it wants to turn its virtual currency into a payment mechanism for all sorts of digital goods.

More at the New York Times.

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