Facebook May be Playing Catch-Up on Video, but It Is Going All In
Figuring out where some social media services are headed is difficult because they seem to be going in half a dozen different directions at once. But that’s not a problem with Facebook.
CEO Mark Zuckerberg has made it crystal clear for some time that he sees video—and particularly live mobile video—as the future, and the social network is busy doubling down on that bet. And given Facebook’s (FB) size and reach, it would probably be unwise to bet against it.
Zuckerberg’s clearest statement about where he sees Facebook going came last year at its F8 developer conference in San Francisco. Asked about the future of the news feed, the Facebook CEO said: “Fast forward five years, it’s going to be [mostly] video. If you look out even further, it will be more immersive content like AR and VR.” According to some recent reports, Zuckerberg is “obsessed” with live-streaming.
In the meantime, Facebook’s engineers have been busy tweaking the algorithm to push videos—especially news-worthy or popular ones—higher in the news feed. And all that tweaking has had the desired effect: Facebook now gets more than 8 billion video views a day. A view is defined as anything longer than three seconds, but that is still a massive amount of video being watched on the service (Snapchat is also close to this number).
It’s not as though the power of video—or the fact that video views still make more money than just about any other form of content—is a big secret in social media-land. YouTube is a massive revenue generator for Google (now known as Alphabet) and has been for some time, pulling in about $7 billion in revenue last year according to some estimates. With those kinds of numbers, YouTube could easily be worth as much as $70 billion if it was a standalone business.
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In fact, Facebook has been taking a very similar approach to video as YouTube took in its early days, in the sense that much of the most popular video content consists of bootlegged or “freebooted” clips of the latest viral event. Facebook says it is working on its own version of YouTube’s Content ID for copyright holders, but in the meantime it is getting massive video numbers, and it is becoming known as the place to go for that kind of content.
So in video, as in many other things, Facebook is playing catch-up. But some of the best technology companies out there (including Google) have done the same thing: Wait until a trend becomes fairly obvious, and then throw everything you have at it, including acquiring whoever seems to have momentum. It’s why Facebook was willing to pay so much for both Instagram ($1 billion) and WhatsApp ($19 billion) and combining those businesses with the network’s massive reach has been like pouring gasoline on a fire.
In December, Facebook boosted its video bets by rolling out live video for all users, something it had been beta-testing with celebrities such as comedian Ricky Gervais and media companies like Univision, where anchor Jorge Ramos has been using the feature to do live reporting on breaking news stories. And this week, the social network announced that it is tweaking the news feed again, to make live video reports more prominent. It described the new feature in a blog post.
“We are considering Live Videos as a new content type – different from normal videos – and learning how to rank them for people in News Feed,” Facebook said. “As a first step, we are making a small update to News Feed so that Facebook Live videos are more likely to appear higher in News Feed when those videos are actually live, compared to after they are no longer live. People spend more than 3x more time watching a Facebook Live video on average compared to a video that’s no longer live.”
As with virtually everything that Facebook does, the end goal is to keep users on the platform longer so that they become more valuable to advertisers. And there are reports that Facebook is courting Hollywood stars with offers to pay them to use the live-video feature, just as it has been trying to convince newspapers and other publishers to provide their stories via Instant Articles.
Facebook may have started out trying to make the news feed “the best personalized newspaper,” as Zuckerberg and product head Chris Cox once described it. But it’s clear that the future of the news feed looks a lot more like TV than it does like a newspaper.
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The giant social network is far from alone in planning for this future, obviously. Even newspapers are trying to push more into video. Twitter has a live video service called Periscope that it has been trying to get some traction for, and Snapchat has become a video powerhouse in a short space of time. But Facebook’s network effects are so powerful that it could easily leapfrog over everyone else–the impact of having more than a billion people a day using your site and sharing videos is a force multiplier that creates a huge competitive advantage.
So what comes next? It’s not hard to see Facebook following the YouTube model even further. Just as the Alphabet subsidiary is making the transition from being a free-for-all video platform to a more subscription-based future with services like YouTube Red, it wouldn’t be surprising to see Facebook at some point forming partnerships with video creators or media outlets and giving them a platform for their own TV-like creations, and possibly even subscription services.
If the future of the web looks like the early days of cable TV, as some media watchers have argued, then Facebook doesn’t just want to be another channel—it wants to be the TV set, cable box and the platform for all the channels at the same time. And it has a market cap of $300 billion and about $17 billion worth of cash on hand that it would be more than happy to spend to buy that future.