IPO listing offers little insight into its showbiz-related plans
Facebook’s long-anticipated IPO plans filed Wednesday may have given investors a glimpse of its future, but details on the role entertainment content will play in the social media behemoth’s growth strategies remain murky at best.
The documents filed with the Securities and Exchange Commission don’t provide much insight into Facebook’s oft-stated plans to play a significant role in the media ecosystem by facilitating content-sharing.
Hollywood’s most prominent placement in the $5 billion IPO filing perhaps comes where Facebook discusses its role as a marketing vehicle. The social network name-drops Paramount in its S-1 filing as a primary example of how it can be valuable in getting the word out on a new release.
“By advertising the release of ‘Transformers: Dark of the Moon’ on Facebook, Paramount Studios reached 65 million users in the United States in a single day,” according to the filing.
But little light is shed on how media companies like Par can leverage Facebook’s so-called open graph, the system, already being used by services including Hulu and Spotify, that makes content consumption visible from friend to friend.
Hollywood’s high hopes for Facebook as a platform for content discovery and transactions were more of a footnote on a day when eye-popping figures were front and center. When Facebook launches its IPO in the spring, the company could be valued at as much as $100 billion.
The S-1 filing indicated the company garnered revenue in 2011 of $3.71 billion, nearly double what it earned the previous year. Perhaps not coincidentally, the number of Facebook employees doubled over the same period, to 3,200.
Advertising accounted for 85% of revenues, with another 12% derived from Zynga, the gaming company that sees nearly all of its revenue come in the form of Facebook currency.
As media congloms like CBS Corp. can attest, the dependence on ad dollars could open up Facebook to criticism for not having more diversified revenue streams. And those same media companies could play a role in that diversification should Facebook try to build Zynga-like relationships with TV and film companies that could turn the platform into more of a transactional interface for video — something that studios and nets including Warner Bros., Universal and Starz have begun to experiment with in recent months.
Facebook founder Mark Zuckerberg owns 28.4% of the company, a stake worth more than $21 billion. He’s also earning this year a base salary of nearly $500,000, which will drop to just $1 in 2013.
“Facebook aspires to build the services that give people the power to share and help them once again transform many of our core institutions and industries,” Zuckerberg wrote in a letter included with the filing.
Ticker symbol for the 8-year-old social network is FB.