Facebook, Netflix, YouTube Want to be Hollywood's Stream Queens

We've been tracking the entertainment industry's digital media revolution for some time, but the marketplace just got a jolt from Warner Brothers. The company said this week that it would test a movie rental on Facebook, allowing users in the US to rent the film The Dark Knight and pay for it with Facebook's virtual currency, Credits.

In another big move, YouTube today debuts Girl Walks Into a Bar. With A-list actors including Josh Hartnett, Danny DeVito, Rosario Dawson and Carla Gugino, it's billed as the first major feature film produced purely for the web.

Produced by Shangri-La Entertainment, Lexus is sponsoring the film's YouTube debut in another closely watched experiment — particularly as it's coming from a Google-owned property — to gauge consumers' appetite for watching movies on the web. With YouTube now moving into original production through its NextNewNetworks acquisition, expect more exclusive-to-YouTube original programming to be coming to YouTube via its partners.

As Business Insider explains, NextNewNetworks' expertise will be helping YouTube's brand and content partners step up their game on the original content front.

That goal in mind, YouTube just announced it's inviting its channel partners to check into its Creators Institute, offering how-to lessons on improving original video and engaging their target audience:

As for the Facebook streaming launch, Thomas Gewecke, president of Warner Brothers Digital Distribution, told the New York Times, "This is definitely a test."

It's a major test, to be sure; and one that could open the door for Facebook to become another distribution channel for streamed rental movies, posing competition to industry leader Netflix — and giving a leg up to new entrants.

Of course, Facebook is already a popular site for online videos, so in that regard, streamed movies is no big deal. The bigger deal for Facebok, though, may be in spreading the usage of Credits currency, which could rival other online payment systems such as PayPal.

Alex Rampell, chief executive of TrialPay, a company that uses Facebook Credits to sell products, told the Times that the currency is already in use by "millions of Facebook users" who purchase virtual goods inside online games. "It seems like a logical step to use the currency to pay for movies," Rampell said.

Warner's move to test renting movies on Facebook is clearly an effort to counter the impact of dropping DVD sales. It will undoubtedly be watched closely by other movie studios. But it is also a signal that media companies are looking for ways to work around distribution services like Netflix and iTunes.

Still, Facebook did not sign any kind of licensing or distribution deal with Warner, reports the Times. Warner is also testing the sale of movies through an iPad app the company just introduced. This application makes it possible for a consumer to purchase a movie directly from Warner rather than through iTunes.

In a related development that could put additional pressure on Netflix, a new online movie rental service called Fandor launched this week. Unlike Netflix, however, Fandor will concentrate only on independent films — a "Netflix for the Sundance Film Festival crowd," writes Vern Kopytoff on the NYT's "Bits" blog.

At $10 monthly, Fandor is competitive with Netflix. The service has started with just 2,500 movies, but Fandor says that 80% of the films it offers are currently not available on Netflix. For customers who want to watch the films on their televisions, Fandor works with a device called Boxee, while the Netflix streaming service operates through a variety of devices, including streaming players, game consoles, DVRs, and HDTV. 

Fandor says it has taken a different approach to licensing movies in that part of the company's revenue is divided equally among the films on Fandor's site. It also is distributing revenue based on a unique time-based system. According to Vern Kopytoff, "A bigger pot of money is distributed based on the number of minutes a film is watched. The more minutes viewers tune in, the more money collected by film makers."

Consider Fandor as one more service that's fanning the flames of the digital streaming revolution.