×
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

  • Netflix iPhone mobile app

    Netflix Tries Out Mobile-Only Subscription Plan in India

    Streaming giant Netflix is testing a mobile-only subscription in India that costs half of its basic plan. Netflix India’s monthly plans begin at INR500 ($7.27). The mobile only plan is being trialled at INR250 ($3.63) per month. “We are always looking for ways to make Netflix more enjoyable and accessible,” a Netflix spokesperson told Variety. [...]

  • How Netflix Uses Technology: A Look

    How Netflix Wants to Take on Its Competition in 2019 and Beyond

    “They’re going to do some great shows. I’m going to be envious.” Netflix CEO Reed Hastings practiced humility when he was asked about new competitors like Disney’s and Apple’s upcoming streaming services this week. “These are amazing, large, well-funded companies with very significant efforts,” he said. “But you do your best job when you have [...]

  • AVOD streaming video OTT users -

    Comcast Unveils 'Flex,' a Streaming Service for Internet Customers

    Comcast said it would unveil “Flex,” a hub for its Internet-only customers that allows them to stream and purchase shows and movies, the latest effort by a traditional cable provider to latch on to customers who are migrating to broadband services, The Philadelphia cable giant will also make free, ad-supported services available via the service, [...]

  • splice

    Splice Raises $57.5 Million in Latest Funding Round

    Splice, a favorite of music creators that allows access to a library of three million rights-cleared sounds, announced today that the company closed a Series C funding round at $57.5 million. That brings Splice’s total amount raised to roughly $102 million since its launch in 2013. It raised a Series B in November of 2017. [...]

  • Facebook's 'Red Table Talk' Garners Daytime

    Facebook's 'Red Table Talk' Garners Daytime Emmy Nomination

    Facebook is now in the awards hunt: Its popular original series “Red Table Talk” hosted by Jada Pinkett Smith was nominated for a 2019 Daytime Emmy. It appears to be the first-ever Daytime Emmy Awards nomination for a Facebook-funded show, although a company rep was unable to confirm that. “Red Table Talk” is nominated in [...]

  • MLB-TV

    MLB.TV Joins Lineup on Amazon's Prime Video Channels

    Amazon has launched MLB.TV on Prime Video Channels for Prime members in the U.S., just in time for the start of Major League Baseball’s 2019 regular season start next week. The MLB.TV package provides regular-season out-of-market baseball games, both live and on-demand. Prime members in the U.S. can subscribe to MLB.TV for $24.99 per month, [...]

  • Tencent Music Shares Drop Despite Solid

    Tencent Music Shares Drop Despite Solid First Earnings Report

    Proving that good is not always good enough, Tencent Music Entertainment shares fell 9 percent after the Chinese company released its 2018 earnings, wiping out $2.7 billion in market capitalization of what is arguably the biggest audio music service in the world. Chalk it up to big expectations and a short track record: Wednesday’s earnings [...]

More From Our Brands

Access exclusive content