×
You will be redirected back to your article in seconds

Facebook Says It’s Cutting Down on Viral Videos as 2017 Revenue Tops $40 Billion

Facebook is cutting down on viral videos as it looks to improve the quality of time spent on the service, announced CEO Mark Zuckerberg as part of the company’s Q4 2017 earnings release Wednesday, which showed that the company surpassed $40 billion in revenue in 2017.

“Last quarter, we made changes to show fewer viral videos to make sure people’s time is well spent,” he said in the release. “In total, we made changes that reduced time spent on Facebook by roughly 50 million hours every day.”

“Helping people connect is more important than maximizing the time they spend on Facebook,” Zuckerberg added on the company’s earnings call. He said that the company would continue to implement quality changes. “That is likely going to continue this trend of decreasing passive consumption.” However, Zuckerberg also said increased interaction would also be good for Facebook’s business in the long run.

Facebook doesn’t typically disclose time spent as part of its earnings metrics. The fact that it did so this time, and to call out a decline, initially rattled investors. They were also scared by a slow-down in user growth, and sent Facebook’s stock down as much as 5% directly following the earnings release.

However, executives assured analysts and investors during the subsequent call that time spent alone isn’t translating to lost ad dollars. “All time spent on Facebook is not equal,” said Facebook CFO Sheryl Sandberg, who pointed out that interaction between friends and family would offer advertisers new opportunities.

Zuckerberg added to this by saying that Facebook would over time build new products and interfaces to encourage interaction between its users. That seemed to calm investors nerves, with stock bouncing back to a $2 after-hours gain.

That’s also because Facebook once again had a blockbuster year in 2017: The company revealed Wednesday that it generated $40.65 billion in revenue in 2017, compared to $26.89 billion in 2016. 

The company also beat revenue expectations for the quarter ending December 31: Facebook generated $12.97 billion revenue during the holiday quarter, compared to $8.8 billion during the same quarter in 2016. Diluted earnings per share came in at $1.44, compared to $1.21 the year before.

Analysts had expected that Facebook would generate revenue of $12.54 billion and earnings of $1.95 per share. Facebook explained the discrepancy on earnings per share with a $0.77 negative impact of the Trump tax cuts.

Facebook’s daily active users reached 1.4 billion in December of 2017, compared to 1.23 billion in December of 2016. Monthly active users were 2.13 billion, compared to 1.86 billion 12 months earlier. However, its U.S. daily active users declined from 185 million to 184 million on a quarter-to-quarter basis — the first time the company has seen such a decline.

Facebook has been changing the way it presents posts within its users news feed over the past couple of months, in part as a response to criticism that it had boosted false and misleading stories during the 2016 Presidential election.

Zuckerberg had already warned investors during the company’s Q3 2017 earnings call that some of these changes, including the hiring of many more employees to screen for inappropriate content, could impact the company’s bottom line. He reiterated that warning Wednesday, and said that improving the quality of Facebook would be his personal challenge for 2018.

More Digital

  • Nick Eh 30, StoneMountain64

    CAA Signs Gaming Influencers Nick Eh 30, StoneMountain64

    CAA has signed two popular live-streaming battle royale gamers — Nicholas Amyoony, better known as Nick Eh 30, and David Steinberg, aka StoneMountain64 — for representation. CAA said it will work to create opportunities for Nick Eh 30 (above left) and StoneMountain64 (above right) in all areas, including TV, motion pictures, touring, digital distribution and [...]

  • Amazon Adds NBA League Pass to

    Amazon Adds NBA League Pass Live-Streaming Games to Prime Video Channels

    Amazon is bringing pro hoops action to Prime Video Channels: The ecommerce giant now offers NBA League Pass as part of its lineup of 150-plus subscription options for Prime members in the U.S. It’s the first U.S. live-sports subscription service on Prime Video Channels. Prime members can subscribe to NBA League Pass via Prime Video [...]

  • Fifty Shades of Grey

    International Piracy Ring Stole Over 25,000 Movie and TV Digital Files, U.S. Feds Say

    A five-member international hacking crime ring stole more than 25,000 files for Hollywood movies and TV shows and illegally offered hundreds of them for sale online, according to U.S. law enforcement officials. A federal grand jury in L.A. on Wednesday (Dec. 12) indicted five men, identified as residing in the U.K., India, Dubai and Malaysia, [...]

  • Phil Schiller, Apple's senior vice president

    Apple to Update iPhones in China to Avoid Sales Ban

    Apple is pushing out a software update to iPhones in China to address a recent court order obtained by Qualcomm that banned the sale of certain iPhone models in the country. The update will allow the company to continue selling its phones in China, company representatives told Reuters Friday morning. The Fuzhou Intermediate People’s Court [...]

  • Kevin Reilly Variety Cover

    Kevin Reilly Named Content Chief for WarnerMedia Streaming Service

    Kevin Reilly — a veteran television exec who has led programming at NBC, FX, Fox, and most recently Turner Broadcasting — has been tapped to head content strategy for the still-nascent streaming service that WarnerMedia plans to launch next year. Reilly, who has led programming at Turner brands TNT and TBS since 2015, will serve [...]

  • Apple Culver City

    Apple Expects to Have Over 1,000 Employees in Culver City by 2022

    Apple announced plans to boost its L.A. presence, saying it expects to have more than 1,000 employees in Culver City, Calif., over the next three years, including its growing entertainment team. The move is part of the tech giant’s broader initiative to create 20,000 jobs in the U.S. by 2023 and includes a new $1 [...]

More From Our Brands

Access exclusive content