June 24, 2011, 4:39 PM

Netflix CEO friends Facebook

Reed Hastings has joined the board of Facebook.

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Facebook and Netflix are two of the Internet’s big success stories. And it appears the two companies believe they can be even more successful by working together.

That’s the conclusion observers are drawing from the announcement yesterday that Reed Hastings, founder and CEO of Netflix Inc., is joining the board of directors of Facebook Inc., becoming only the sixth member of that board, including Facebook founder and CEO Mark Zuckerberg. Hastings sits on only one other corporate board, that of Microsoft Corp., which owns a minority stake in Facebook. That leads some to see a coalition emerging of Facebook, Microsoft and Netflix against their common competitor, Google Inc., which has ambitions in social networking, software and digital content.

More immediately, observers say, Netflix and Facebook are likely to join forces in streaming movies and TV shows to Facebook’s more than 500 million users. Facebook is looking to monetize its huge audience, and Netflix, with 23 million consumers paying monthly fees to get movies and TV shows via DVD and online streaming, knows monetization. Netflix is No. 13 in the Internet Retailer Top 500 Guide.

“Facebook will, of course, stay free, but subscription services could be an added revenue driver,” says David Berkowitz, senior director of emerging media and innovation at online advertising agency 360i. “Combine Mark Zuckerberg’s understanding of social dynamics with Reed Hastings’ monetization skills and one can only image what will unfold.”

Facebook has been exploring ways to offer entertainment, Berkowitz notes. That includes a test announced in March in which movie studio Warner Bros. made two popular movies available on Facebook, where consumers could pay to watch them with Facebook Credits, the social network’s own currency. “Rumors are also amassing about Facebook launching a music service,” Berkowitz says. “Lady Gaga alone has 39 million fans, and it’s hardly a leap for the network.”

Hastings could also prove valuable as Facebook contemplates going public, a move Zuckerberg has described as inevitable. “Hastings is an experienced executive, as well as a Microsoft board member, and it makes sense for Facebook CEO Mark Zuckerberg to have someone like him around as the company considers big-company decisions, like going public,” writes Eric Eldon, editor in chief of Inside Network, an industry publication and research firm that covers social networks like Facebook, in a blog post.

For their part, Hastings and Zuckerberg expressed their mutual admiration in prepared statements.

"Reed is an entrepreneur and technologist who has led Netflix to transform the way people watch movies and TV," Zuckerberg said. "He has built a culture of continuous rapid innovation, something we share and work hard to build every day."

"Facebook is propelling a fundamental change in how people connect with each other and share all kinds of content," Hastings said. "I'm looking forward to working with Mark and the rest of the board to help Facebook take advantage of all the opportunities ahead."

Besides Zuckerberg and Hastings, the Facebook board includes Donald E. Graham, chairman and CEO of The Washington Post Company, and representatives of three major Silicon Valley-area venture capital firms: Marc Andreessen of Andreessen Horowitz, Jim Breyer of Accel Partners and Peter Thiel of Clarium Capital and Founders Fund.

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