Goldman Sachs: Facebook is a Threat to Netflix

The choice of Facebook to try digital movie rentals and purchases with Warner Bros. is no direct risk to streaming service of Netflix, although makes a new probable longer-term online video opponent,  according to the Goldman Sachs analyst Ingrid Chung.

She said in a report that “Facebook’s foray into pay-per-view does not impact our Netflix estimates.  However, Facebook represents a new potential entrant that few in the investment community were concerned with prior to this announcement, so we believe it does indeed represent an incremental negative for Netflix shares.”

She further said that Facebook might in the future turn out to be a risk to Netflix.

netflix and facebook

For the moment, Facebook appears to place itself as a pay-per-view platform, Chung said, “which is more of a threat to other forms of VOD (such as iTunes or Amazon).”  She added that the social networking location “lacks content, does not have wide distribution across devices that connect to the living room TV, has few people on the payments platform and does not have an incumbent business that is under threat from increasing online video viewership.”

It might turn out to be an opponent and worries for Netflix, she fought, citing over 500 million active users of Facebook, weighed against 20 million subscribers of Netflix.

Chung said, “The “wisdom of friends” can be a better driver of movie viewership than the “wisdom of crowds.” Plus: “We believe that many of the issues outlined above could be fixed over time, including the gap to the living room TV.”

Prior this year Goldman invested $450 million in Facebook.

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