Dive Brief:
- Facebook is developing an app for television set-top boxes such as Apple TV, sources told The Wall Street Journal.
- The Journal also reports that Facebook is in discussions to license long-form "premium" video content akin to TV programming.
- Facebook recently claimed that it's running out of real estate in News Feed for digital advertisements, which are the main source of its revenue. A video app for TV opens up new possibilities for Facebook but also puts the company in a highly crowded market, namely against Google’s YouTube.
Dive Insight:
Facebook executives have suggested that its content could be "all video" within the next five years or so, and a set-top box app would be one of the more dramatic steps in that evolution. In November, Facebook began delivering ads to set-top boxes like Roku and Apple TV but premium programming for a standalone service is largely uncharted territory for the company. Whether users will tune into far larger screens to watch Facebook content is an uncertainty.
While long-form premium content would undoubtedly ramp up Facebook's overall video strategy, the set-top app opens up other opportunities as well. Features like Facebook Live have proven incredibly popular with users —Facebook Live was shown to be the most popular platform for streaming during a six-month period last year —and tapping the set-top app to showcase popular streams and trending topics, or to connect users with their friends, could be both a lucrative and distinct avenue to pursue.
A variety of social platforms — if they can even be labeled just "social" platforms anymore — have also invested in original TV-like programming, including Twitter and Snapchat, the latter of which recently partnered with both Disney and Turner for original series.
Facebook’s audience, at around 1.8 billion, dwarfs both Twitter and Snap, however, which might make its set-top content a bigger draw for bigger brands. The real competition Facebook would rub up against would ultimately be YouTube, which currently owns the market for social video.
On its recent fourth quarter earnings call, Alphabet highlighted just how essential YouTube has become to its ad strategy beyond search, with an analyst suggesting the video portal could be an "heir apparent" to search, per the Journal. EMarketer forecasts that YouTube’s net U.S. video ad revenue could reach $2.59 billion in 2017, accounting for 20% of total U.S. video ad revenue — the single largest share of any one company.
Facebook is similarly aiming to better monetize video offerings beyond the digital ad business that’s supported it for years. The company recently introduced mid-roll ads for videos on its core platform and adjusted its algorithm to support longer video run times instead of punishing them, as it had done in the past.
