For quite some time, Netflix has been the undisputed king of online DVD rentals. They were the first company to take advantage of the internet to help people find and watch the movies they wanted. They proved that there was a valid online business model in movies-as-a-service and not just movies-as-a-product. They pioneered the concept of the “rental queue”. They’ve been praised endlessly for their operational efficiencies. But that was the past, and it would appear that Netflix is facing the greatest threat they’ve ever seen. And no, it’s not Blockbuster or iTunes or Amazon.

It’s an 8 person shop in San Francisco.

Flixster is a mere one year old, and already they are one of the largest movie sites online right now. They have fully embraced the new platform and continue to refine their ever-changing application within Facebook. Every time I log in, there appears to be a change made or a feature added. It’s clear that they are comfortable evolving inside their new medium, and judging by the slowdowns and suspension of QuickRate, I’m guessing their also struggling to adapt to the influx of additional traffic. Now that they’ve firmly planted themselves as one of the top Facebook applications, one has to wonder if Netflix is starting to sweat.

Not too long ago, Netflix announced a contest to help them find a better way to “connect people to the movies they love”. I wonder what the winning solution will be? (Hint: Build an app for Facebook before it’s too late)

At the moment Flixster has the lead, but they lack the ability to fulfill my desire to actually watch movies (and not just rate them). This is Netflix’s one and only advantage, and they should act quickly to integrate themselves into the Facebook platform to take advantage of it. Users should be able to quickly rate, review and add movies to their rental queue within the Facebook world. People should be able to proudly display their queue so their friends can see what they’re watching now and what they’ll be watching next.

Quite frankly, if Netflix is going to survive, they need to displace Flixster and become the dominate movie application on Facebook. I just wonder if it’s already too late?

Along with the Leopard preview at WWDC yesterday, Apple also unveiled a significant update to Apple.com. If you haven’t seen it yet, take a moment to look it over. Not unlike how they’ve reshaped the computer and music industries, it appears as if Apple is looking to redefine the rules of online design as well.

A few observations:

• The first and most obvious change is the drastically simplified navigation. It’s clean, void of clutter, and I’m sure it caused a number of internal debates, as all but core-business links have been removed (and if there was any debate before, I think it’s quite clear that Apple is indeed a hardware company).
• They have fully embraced 1024 as the de facto resolution with the width of the site now stretching to 980px.
• Products are now predominately in a horizontal-scrolling window (horizontal scrolling has typically been frowned upon).
• Extensive use of AJAX throughout, primarily as a means of eliminating clutter through hiding/sliding panels.
• Breadcrumb navigation has been moved to the footer, which I think is a first for any major corporate site (or possibly a first for any site… I haven’t seen it done before).
• Apple is also unafraid to use different background colors throughout the site (black or white), although I’m not sure if there are any rules governing which color is used when.
• There are a number of excellent (and well produced) videos throughout which all use a styled Quicktime player (checkout the Leopard Preview for a number of examples).
• I don’t believe Flash is used at all in the site. (Video is handled by Quicktime, and animation by AJAX).
• There are plenty of exceptions, but overall there appears to be a move to increase the whitespace on pages.
• Quite simply, the new site feels more like OS X than just a standard corporate website.

Overall, I’m curious to see how the industry will respond to the new site, as a number of the decisions Apple have made here contradict so-called “best practices”.

As I wait for something to download over our slow (but thankfully available) satellite internet connection here at the cottage (inside working and not outside enjoying this beautiful Saturday!) I decided to take a few minutes to reflect on the virtues of Facebook. But before I get too far, let me say this. If you’ve heard of Facebook but currently aren’t using it, odds are you have a misconception of what it actually is and why it’s so important.

When I first heard about Facebook, I was reluctant to create an account simply because I didn’t see the value in doing so. My original perception was that of another MySpace, aimed primarily at students to communicate and share photos with each other. And while that may very well have been the case when Facebook was originally concived, things have changed considerably since then.

Facebook looks to be one the most important—and possibly valuable—technologies to emerge online in quite a number of years. Quite frankly, it will not surprise me to see Facebook become an online giant on the scale of Google.

As with every other social-networking site, Facebook’s primary value comes from the network of “friends” you build. However, I believe Facebook is the first of the sites to truly understand the full potential of this network, and with the release of their Apps they’ve set out to fully tap into it.

For example, the News Feed feature which has been around for a while now (and apparently caused quite a stir when it was first launched). It’s a straightforward concept, but was quite unique when it was originally conceived. Put simply, the News Feed is an “activity aggregator” which takes all of the various activities of your friends, and presents the information in one convenient list.

The best analogy I can think of is that of being in a room with all your friends, and there are a number of conversations going on around you. You can hear what’s going on and can choose to participate if you like. So, if someone posts a video, you’ll see it. If someone comments on a photo, you’ll see it. If someone rates a movie, you’ll see it.

I think you get the idea.

(This obviously raises a number of privacy concerns, but Facebook has seen fit to provided a number of flexible options to ensure everyone has a comfortable level of privacy.)

Along the same lines, I’ve noticed a common trend for users of social-networking sites to build out the biggest network possible. Size always seems to be an issue for some. In the case of Facebook, I actually think a larger network dilutes its value to you simply because you’re faced with increased noise from the network. That said, I have to give Facebook credit as they’re utilizing some interesting algorithms to filter out the unwanted clutter to only present you with relevant info (in the case of the News Feed at least).

And just a few weeks ago, Facebook has taken the next step as they further transform themselves into a full fledged platform. With the release of Applications, third-party developers can now write apps that can run inside of Facebook and tap into your network of friends (or social graph src=”A056EA628FAE2BFE” alt=”” border=”0” />social graph src=”A056EA628FAE2BFE” alt=”” border=”0” />4445.entry as Facebook calls it). It may not be apparent at first, but this is hugely important because it provides contextual relevance to many aspects of the internet. David Sacks (of PayPal fame) had some interesting things to say about this topic a few weeks back, and I have to agree with him (except for the peanut butter & bread analogy… it didn’t feel quite right).

We’re just starting to see the first generations of applications created by developers, and the results look very promising. And to everyone who hasn’t checked Facebook out yet, I suggest you give it a try. Myself however, I welcome our new social-network overlords.