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Facebook Bets $1 Billion on Content, but Will It Pay Off?

Facebook keeps throwing more money at original entertainment, news and sports video content. But it’s still unclear how successful the tech giant’s strategy will prove or how well it’s performed overall so far.

Analysts expect Facebook to plunk down at least $1 billion — and as much as twice that — over the next 12 months. The company’s goal is to turn Facebook Watch, its interactive video destination already launched in the U.S., into a TV-like habit for its massive user base and their friends. And, execs hope, that will land the platform TV-like ad bucks.

Facebook has ordered a batch of exclusive news programs, fully funded by the company, from partners including ABC News, CNN, Fox News Channel and Univision and slated them to go live this summer. Part of the strategy is to atone for Facebook’s “fake news” controversies by bringing in shows featuring well-known personalities like CNN’s Anderson Cooper and FNC’s Shepard Smith.

Other Facebook Watch programs revolve around celebrities — for instance, Jada Pinkett Smith and family’s “Red Table Talk,” Tia Mowry’s “Quick Fix” and a reality show about Instagram beauty influencer Huda Kattan’s cosmetics company. The platform also has greenlit scripted projects including teen-violence drama “Five Points” from exec producer Kerry Washington, which premiered June 4.

Long term, sports will likely represent the bulk of Facebook’s content spending. Exclusive deals this year include rights to 25 MLB day games in the U.S. as well as live events from extreme-sports producer Nitro Circus.

“There’s an all-out assault for Facebook to acquire content, especially as their user growth has slowed,” says Daniel Ives, head of technology research at GBH Insights, who predicts the company will spend $1.5 billion-$2 billion in the coming year on video programming. “They are not spending $8 billion on content like a Netflix. But it would be a strategic mistake that would haunt them if they don’t go after both original and licensed content.”

For now, it’s tough to get a bead on how well Watch is playing. Facebook isn’t sharing any metrics or data related to Facebook Watch. Third-party research outfits like Nielsen, comScore and Tubular Labs don’t publicly provide figures for the video content, either.

One breakout show has been “Ball in the Family,” which follows LaVar Ball, his wife, Tina, and his basketball-playing brood, including son Lonzo, a point guard for the L.A. Lakers. The show has nearly 1.5 million followers — its third season premiered June 10 — and episodes have been viewed more than 110 million times, according to Facebook’s public counter.

“That was the show that first kind of put Watch on the map,” says Ricky Van Veen, Facebook’s head of global creative strategy. According to Facebook’s public stats, “Ball in the Family” increased average views per episode from 2.6 million across the first run to 4.6 million for Season 2. But how do those figures translate into real audience? It’s worth noting that in April 2018 alone, BuzzFeed’s Tasty recipe videos tabulated around 1 billion views, according to Tubular.

“It would be a strategic mistake that would haunt them if they don’t go after both original and licensed content.”
Daniel Ives, GBH Insights

Moreover, Facebook tabulates a “view” even if it’s watched for as little as three seconds. Data indicates people are spending relatively little time viewing Facebook Watch episodes on average: In October 2017, two months into the launch of the new platform, the average watch time for content was 23 seconds per session, according to social-video analytics company Delmondo. As of early June, that average has increased to more than 60 seconds — still well short of the kind of engagement that would give Facebook opportunities to insert midroll ad breaks.

Van Veen acknowledges that viral videos are going to get more play and shares than longer series. But from his perch, just as important as raw viewing time are the social-engagement results.

For example, while “Red Table Talk” has garnered 2.2 million followers since debuting May 7, even more exciting to Van Veen is the fact that the program’s official Facebook group has nearly 260,000 members who discuss the show and submit questions for the hosts to chew on every week. “This show is a bull’s-eye for us in terms of Facebook trying to connect people and create community,” he says.

Today, there are tens of thousands of shows on Facebook Watch, most of which aren’t funded by the company. But less than a year in, Facebook’s original-content push remains an experiment. The video strategy is several years away from being a “meaningful contributor” to profits, says Wedbush Securities analyst Michael Pachter. He’s watching to see whether the original programming can boost time spent on the platform: “If they can get you to watch some of your shows on Facebook, they’ll capture some of those TV advertising dollars.”

Mike Bloxham, senior VP of global media and entertainment at consultancy Magid, says Facebook is playing a long game — building a massive audience first before trying to feed it programming. But, he cautions, there’s no guarantee its efforts will pay off.

“It’s not a slam dunk,” he says. “Just because you pull together a unit that acquires content doesn’t mean you are going to be successful.”

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