Netflix will enable subscribers in the United States connect their profiles to Facebook as soon as President Barack Obama signs a popular bill into law, the company confirmed today.

The bill, which will permits Netflix members share their viewing history with friends online, has cleared the U.S. House and Senate and now it just needs Obama’s signature, which should happen in the near future.

“We are pleased that the Senate moved so quickly after the House,” Netflix said in a statement to Talking Points Memo. “We plan to introduce social features for our U.S. members in 2013, after the president signs it.”

Netflix has been noticeably absent from Facebook’s Timeline feature due to a clearly outdated 1988 law that forbids video rental services from sharing a customer’s rental history. The bill was passed in the Blockbuster days and was designed to stop folks from seeing other people’s viewing habits. But with Facebook and other social networks, people often want to share what content they are consuming.

This should be a major win for Netflix, which has been pushing for the legislative changes for more than a year. With more sharing on Facebook, it could encourage more users to sign up or try Netflix.

Netflix has dethroned Apple as the largest online movie service in the U.S. for 2011, according to a new report from IHS iSuppli.

The data intelligence firm’s conclusion is based on Netflix’s total revenue last year, and indicates that the company’s overall market share in online movie services grew by 44 percent compared to the previous year. Mind you, that growth comes despite Netflix’s various screw-ups, such as its plan to spin-off the DVD-by-mail part of its business into a separate entity, a 60 percent price hike, and generally ignoring its customers. (It’s worth noting that Netflix seems to have weathered most of those storms judging by its current subscriber numbers.)

Meanwhile, IHS’ data shows that Apple’s 2011 iTunes market share of online movies was cut in half and dropped to 32.3 percent compared to last year. These figures undoubtedly played a role in Apple’s decision to start letting Apple TV owners sign up/subscribe to Netflix using their iTunes account back in March. While nothing has been publicly disclosed, its presumed that Apple is getting a percentage of every Netflix customer that pays through iTunes — a move that’s probably proving more profitable than Apple’s video rental and purchase sales.

In the report, IHS Digital Media Research Director Dan Cryan notes that the online movie business is also rapidly changing. Consumer spending more than doubled to $992 million in 2011 compared to the previous year, while traditional retail store movie sales dropped 12 percent to $8.8 million. Cryan also points out that there is a limit to how much you can even compare Netflix to Apple.

“Effectively the market has split,” Cryan said. “Netflix and Apple are competing for some of the same consumer time and money. However, the core value proposition of the two services is actually very different.”

The antiquated law, the Video Privacy Protection Act (VPPA), prohibits companies like Netflix from sharing a person’s movie-rental history. The law was passed in 1988 after Supreme Court nominee Robert Bork’s video rental records were published in a news publication. At the time, the law seemed to make sense because a person’s video rental history does have the potential to affect public opinion about that person — especially when running for public office or being nominated for a public position.

Technology has moved on since 1988, however, and people are more willing to share information about what they’re watching now.

Last month, the House passed an updated version of VPPA that allows consumers to give a one-time consent to release their rental data — regardless of what format the movies are in (streaming video, downloaded files, DVDs, or VHS). Such a measure would allow Netflix to take advantage of social features on Facebook’s “Open Graph” platform. For instance, if you read a news story on Facebook using an app, that app will let all your friends know immediately what you’re reading. Netflix integration could do a similar thing for movies you watch through Facebook.

In fact, Netflix subscribers in Canada and Latin America already have access to the Facebook integration, so their friends can see what they’re watching. But that’s not legal in the U.S., thanks to the VPPA — which is why the House has proposed amending the law.

Unfortunately, a number of prominent Democratic senators don’t agree with the House’s proposed amendments.

Among those who spoke up against passing the House’s updated bill was Sen. Patrick Leahy (D-Vt.), who not only authored the 1988 VPPA legislation, but also the highly protested Protect Intellectual Property Act (PIPA).

At the hearing Tuesday, Leahy described the House’s bill as “dominant corporate interests (enticing) a check off in order to receive what may seem like a fun new app or service.” And while this seems like a reasonable observation, further comments by the senator indicated that he really has no clue how Facebook works — especially not in regards to the new news ticker feature the giant social network implemented in September.

“A one-time check off that has the effect of an all-time surrender of privacy does not seem to me the best course for consumers,” Leahy added. A one-time “check off” that allows Netflix to do whatever it wants to with your viewing history probably wouldn’t be in a person’s best interest. However, under Facebook’s terms of service, a third-party application can only gain access to your Facebook profile for as long as you allow it to. Therefore, Leahy’s point is sort of invalid, and at the very least ill-informed.

Sen. Al Franken (D-Minn.), who is chairman of the subcommittee in charge of the hearing, also criticized the House bill because it was unclear whether it would make movie rental companies obtain permission for every single movie a person rents.

“Streaming is the future of video, but no judge has ever decided whether or not the VPPA covers stream video companies,” Franken said. “I think it’s clear that the law does cover new technologies like streamings because it doesn’t just cover ‘pre-recorded video cassette tapes’ but also… ‘similar audio/video materials’”.

Franken said there’s a good chance that a judge may decide that the current VPPA law doesn’t include streaming media, which is why he doesn’t want to leave “the future of video privacy up to a judge.”

While I’ll agree with Franken on the necessity to update old laws to include new technologies, I disagree that “streaming” video privacy is any different than regular privacy. Currently, none of the other streaming media services (music, television shows, or radio/webcasts) are hindered by the VPPA. Yet, a revised law could change that.

Apparently, the senators don’t believe that a streaming service that provides unlimited access to movies is much different from a brick-and-mortar video rental shop from the 1980′s. To help out the senators, we can point out some obvious differences: Netflix’s streaming service, for instance, lacks the annoying late fees, membership ID cards, and that door in the back covered in hippie beads that only adults are allowed to enter.

Do your think we need new laws specifically for streaming media to protect privacy? Give us a shout with your thoughts in the comment section.

But don’t expect the deal to help Blockbuster’s remaining 1,700 beleaguered stores. Dish is likely aiming to take advantage of Blockbuster’s online video streaming service, disc-by-mail rentals and rental kiosks.

“Blockbuster will complement our existing video offerings while presenting cross-marketing and service extension opportunities for Dish Network,” Tom Cullen, executive vice president of sales, marketing and programing for Dish Network, told Reuters.

Perhaps the smartest thing for Dish to do is rid itself of even more Blockbuster retail locations and focus on a wider proliferation of its kiosks, which compete directly with DVD kiosk company Redbox, and focus more on its video streaming service, which is available on multiple mobile and TV set-top devices.

The purchase also opens the door for Dish to offer cross-promotion deals with its satellite TV and Blockbuster’s services. I wouldn’t be surprised if Dish ends up offering free Blockbuster streaming accounts and disc rentals to its subscribers as an added bonus. The combination of Dish and Blockbuster could attack Netflix — which doesn’t offer rental kiosks or traditional TV service — from multiple sides.

It’s also worth considering just how far Blockbuster has fallen. At its highest point, the company’s market cap sat at more than $5 billion in 2002. Now, Dish has managed to snag it for slightly more than two times what Netflix paid to stream Mad Men.

Dish’s bid still needs to be approved by federal bankruptcy court at a hearing on Thursday.

Netflix has all but won the video rental wars now that Blockbuster has filed for bankruptcy, but it’s stepping up its game in the video streaming sector. Newcomers like video streaming site Hulu have emerged as the number one threat to Netflix and competitor Redbox’s dominance over subscription video services. Hulu, which streams broadcast content from networks like Fox and ABC, was recently the subject of IPO rumors that valued the company at around $2 billion and is preparing to launch its own premium subscription service Hulu Plus.

As a result, Netflix has begun pouring massive amounts of money into acquiring content to stream online. The $115 million payout this quarter was more than 10 times greater than the $10 million it paid in the same quarter last year. Netflix also paid out $66 million last quarter to acquire additional content for online streaming. It represents a substantial investment — about one fifth of Netflix’s operating revenue last quarter was used to acquire new streaming content — and a clear bet on where video subscription services are going on Netflix’s end.

Netflix’s net income jumped to about $38 million this quarter, compared to $30 million in the same quarter last year, after adding another million subscribers in the last quarter. That brings Netflix’s total subscribers to somewhere between 19 million and 19.7 million, according to its earnings report. Netflix’s revenue jumped 31 percent to $553 million this quarter compared to $423 million in the same quarter last year.

Investors bought into the strategy, sending the subscription service’s shares up 8.6 percent to $166.30 in extended trading today.