What if YouTube and Facebook replace TV?

By January 11, 2013YouTube

Both are producing new high-quality original series.

With the United States, digital advertising takes the lead. Now, Google and Facebook (the biggest digital ad businesses )are tackling the TV industry’s revenue. A revenue worth $70 billion.

To do this, they’re both planning to commission television-quality videos: Facebook with its recently launched video tab in its flagship Facebook app and YouTube with Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) which will distribute its new originals there.

YouTube’s goal is to win back advertisers’ good graces after issues arose around ads being shown within sight of objectable content. Ads that were not given permission to be there. On the other hand, Facebook wants users to spend even more time in its app and work to development more areas to place their ads.

YouTube’s third time.

Youtube is at its third attempt of producing contents.

The first one was back in 2011 when it spent $100 million seeding celebrity channels. The project failed and Youtube opened studio spaces for top content creators to produce new originals.

Now, the third attempt: going back to big-name celebrities like Kevin Hart and Ellen Degeneres.

But there’s something misguided in YouTube’s business strategy. “Five years ago, 85 percent of all original series were ad-supported,” Robert Kyncl, YouTube’s business chief, said. “This year, that number has fallen to just over two-thirds.”

This number plummets each year since ad-free streaming and high end cable create original shows. Regardless, television has seen no decrease in advertising opportunities. In fact, more new shows air than ever before.

In order to remain competitive YouTube must attract advertisers away from a market that still has plenty of life left in it, not the shrinking industry Kyncl alludes to.

Facebook fights to be the first choice

Facebook CEO Mark Zuckerberg described two use cases for Facebook. The first is whenever users have a free minute, they’ll skim through their news feed. The second use case is when they’re seeking out specific entertainment and want to see content from someone they follow, or a topic they’re interested in. That’s a use case Facebook is still working on, and one currently being won by television and YouTube.

“We want people to think of Facebook as a place for interesting and relevant video content from professional creators as well as their friends,” Zuckerberg said on Facebook’s fourth-quarter earnings call. “Last year we started to invest in more original video content to help seed the ecosystem, and we’re planning to do more in 2017.”

And they’re actually working on that.  Facebook creators are planning to produce two dozen original programs. Some will be longer, big-budget shows of TV-level quality (like the Netflix series House of Cards). The rest will be shorter, 5- to 10-minute shows updated daily.

The goal is to eventually develop a fully ad-supported ecosystem of quality content using mid-roll video ads, thus opening up further ad inventory for Facebook. Facebook certainly takes advantage of all its advertising to the fullest extent.

Potentially, television-quality programming combined with Facebook’s superior ad targeting could help Facebook steal away some ad budgets from television networks and YouTube. On one condition: a new user behavior has to be instilled. It’s not an easy task, but if any company has the strength to change how people use its product, though, it’s Facebook.



Crystal Michels

About Crystal Michels

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