Facebook Is Testing Out a New Video Channel
Must-Know News Updates in the Media Sector
New video channel
On October 13, 2015, the Wall Street Journal reported that Facebook (FB) is testing out a dedicated video channel that will appear as a tab on users’ home pages and will allow users to save the videos that appear in their news feeds. It will also feature recommended videos watched by other users or videos posted by friends.
Facebook is increasingly experimenting with video formats to compete with Alphabet’s (GOOG) YouTube and get a share of online advertising revenues. Facebook’s strategy is to give its users a more immersive video experience.
According to a report from the Wall Street Journal, Facebook will keep 45% of ad revenues and give the rest to video content providers. This move by Facebook is aimed at leveraging the fast-growing video ad market. According to a report from eMarketer, and as the graph above shows, the US digital video ad market could keep growing at a healthy rate, from $5.9 billion in 2014 to $12.3 billion in 2018.
Would Facebook be able to compete with YouTube?
Facebook users reportedly watch more than 4 billion videos per day. This has resulted in Facebook concentrating on tweaking its Videos feature. In July this year, Facebook introduced the Suggested Videos feature that will have ads between videos.
Facebook also said that it would share advertising revenues with its content creators, keeping 45% of ad revenues. This ad revenue sharing model is similar to YouTube’s.
Even Twitter (TWTR) is looking to leverage this fast-growing market with its recently launched autoplay videos feature. These videos play automatically on a user’s timeline but are muted as the user scrolls down the timeline. However, both Facebook and Twitter are unlikely to give any stiff competition to YouTube for now, only because YouTube’s reach is increasing at a rapid rate.
During its 2Q15 earnings conference call, Alphabet mentioned that YouTube now reaches more users in the United States from 18–49 years old on their mobile devices than any US cable network.
According to Alphabet, the mobile viewing time per user on YouTube is now 40 minutes per day, which has risen by 50% on a year-over-year basis. The number of users who start at the YouTube home page has gone up three times over the last year.
You can get exposure to Facebook by investing in the PowerShares QQQ Trust Series 1 ETF (QQQ), which has 4.3% exposure to the company. The same ETF also holds 12.8% of Apple (AAPL).
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