Friday, February 24, 2017

Facebook vs Television

Facebook had two major announcements in recent weeks, one announcing a new video app for set-top boxes, and another saying that it will start putting ads in the middle of published videos, similar to TV commercials.

The strategy behind the two announcements is clear:  To expand Facebook's share of the consumer's time devoted to leisurely activities, to create an additional revenue stream via video ads, and to add value to marketers by increasing the time spent on the website or app.  

But one of the primary reasons that video consumers are abandoning traditional television models is to avoid commercials, doesn't Facebook's new video strategy defy just that logic?  While the video publisher could continue to publish content on Facebook and now make 55% of the ad revenue that Facebook is offering to them, a viewer could just as likely see the same video the publisher is also displaying on Youtube without inconvenience of the advertisements.  Only time will tell how Youtube will react to this model, which also has a live feed option.

For the last year, Facebook has paid celebrities and publishers to use its live video product, and this new ad revenue model is meant to replace that strategy and create revenue.  

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