Netflix Gets Exactly What It Wanted for Christmas

Did you ever wonder why Netflix (NASDAQ: NFLX  ) doesn't work together with Facebook (NASDAQ: FB  ) at all? I mean, everybody else is going social. Sharing a video from Google's (NASDAQ: GOOGL  ) YouTube with your Facebook friends or Twitter followers is only a click away. Same with Flickr photos, hosted by Yahoo! (NASDAQ: YHOO  ) . Feel like sharing your taste in music? You can set up Spotify or Winamp to send updates through Facebook or Last.fm every time you start playing a track. And yes, we make it easy to Like or tweet Fool articles as well. Feel free to try out our sharing tools right now -- I'll wait right here.

So yeah, pretty much everyone is doing it. Every chance we get, in fact.

So why can't we?
But you won't find any Facebook or Twitter buttons on the Netflix Streaming site. CEO Reed Hastings sits on Facebook's board of directors, but there's no interaction at all between the two services. Not in the U.S. anyway -- access Netflix from Canada or Mexico, or any of the other 40-plus territories covered by Netflix streams, and you will find Facebook integration.

Sign up for Netflix the easy way. But you have to pay in British pounds. Source: Netflix.

For example, you can share your viewing habits with your friends and peek at other people's recent activity. And the laborious process of entering all your personal information in order to grab a free trial is replaced by another single click -- just sign up via Facebook.

But we Yankees will soon get to join the club, too. Netflix has stayed out of Facebook sharing because of a 20-year old law that wraps video rental histories in thick layers of extra privacy. Hastings has been pushing for changes for years, and Congress started moving a bill to get it done in 2011. That bill was approved in the House but sent back from the Senate with some proposed changes. A year passed and nothing else happened.

Hurry up and wait
And then a new bill was introduced to the House this Monday, breezing past committee and House approvals by Tuesday. Congress watchers suggested that the Senate could do its part in a couple of weeks. But by Thursday afternoon, the Senate had also approved it and Netflix is just waiting for a presidential signature. It's amazing how quickly things can get done sometimes. Let's see if Congress can pull off another turbo trick with the fiscal cliff, too.

This version allows Netflix and other video services to share rental and viewing activities, but with the caveat that users must give their informed consent every two years and it must be easy to remove that consent at any time. This way, both social butterflies and privacy advocates get what they want.

Curiously, rival digital video site Hulu already has a "social sharing" option available. It's not quite a full Facebook hookup -- Hulu imports your list of friends and only shares activity with Facebookers who also already have a Hulu account. I'm no privacy and intellectual property lawyer, but maybe that's just enough to get by under current rules. Either way, this won't be a worry for much longer.

The precipitous drop in Netflix shares since the summer of 2011 has caused many shareholders to lose hope. While the company's first-mover status is often viewed as a competitive advantage, the opportunities in streaming media have brought some new, deep-pocketed rivals looking for their piece of a growing pie. Can Netflix fend off this burgeoning competition, and will its international growth aspirations really pay off? These are must-know issues for investors, which is why we've released a brand-new premium report on Netflix. Inside, you'll learn about the key opportunities and risks facing the company, as well as reasons to buy or sell the stock. We're also offering a full year of updates as key news hits, so make sure to click here and claim a copy today.


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