On August 31st, Alphabet Inc.’s (NASDAQ:$GOOG) Youtube saw a new enemy for advertising revenue: Facebook Inc’s (NASDAQ:$FB) Watch video. Facebook launched the service to U.S. users this morning, allowing users to submit their own shows.
As the trend for viewing content shifts from television to smartphones and tablets, so does the allocation of advertising budgets. Statistically, Americans spend more than 73 minutes a day watching digital video, whereas TV watching has dropped 2% from last year.
Facebook plans to pay content creators for shows to drive initial interest. Specifically, they will pay $10,000-$35,000 for short shows, and up to $250,000 for longer. However, Vice President of Partnerships at Facebook, Dan Rose stated: “We do not plan to make buying content a core strategy. We are not focused on acquiring exclusive rights. Instead, the idea is to seed this with good content.”
Eventually, Facebook hopes to allow everyone to submit shows on its Watch platform while sharing 55% of ad revenue. In the meantime, Watch will help Facebook solidify its position as an ad revenue competitor against Youtube, who is the reigning leader in the digital video space.
Competitive Edge
Compared to Youtube, Facebook’s Watch will be more personal and community-oriented. Watch allows users to share their thoughts while watching content, and suggests shows based on user’s interests. What does this look like? A fan of “CrossFit”, for example, can watch and comment on any live CrossFit events while chatting in groups with other users.
The ultimate goal of Watch is to leverage Facebook’s community engagement, through creating topics that users are passionate, and love to talk about.
Featured Image: twitter
