Facebook (NASDAQ: FB) has big plans to break into the video streaming industry by the end of this summer, according to last week's bold announcement in the Wall Street Journal. Reportedly, the company is willing to pay up to $3 million per each episode of original, television-like, scripted content. This move comes at a time when Facebook's earnings have grown shares by an incredible 35% since the start of this year, as reported by Market Watch. In the most recent quarter, the company generated over $8 billion in revenue.
As a site known for the "hottest ad spots" according to LearnBonds.com, creators hired to contribute video content will get a share of that ad revenue. Earlier this month, Facebook signed deals with media outlets ATTN, Vox Media, and BuzzFeed to create short form content. All these sites have proven to be popular among young Facebook users. The social network aims to create both 30-minute programs (that will include advertisements like traditional television episodes), and smaller-budget programs that will range from about five to 10 minutes long each.
"We're supporting a small group of partners and creators as they experiment with the kinds of shows you can build a community around, from sports to comedy to reality to gaming. We're focused on episodic shows and helping all our partners understand what works across different verticals and topics. We're funding these shows directly now, but over time we want to help lots of creators make videos funded through revenue sharing products like Ad Break," said VP of Media Partnerships, Nick Grudin, to the Verge yesterday. This model will differ greatly from Facebook's recent pushes into the world of streaming; namely user-generated live streaming videos via "Facebook Live."
The video market is not uncharted territory; Facebook's competitors have produced both successful and failing content over this past year. Amazon.com, Inc (NASDAQ: AMZN) and Apple Inc. (NASDAQ: AAPL) have so far enjoyed the benefits of this growing market, while longtime video site Netflix has begun to cut some of their unpopular original content at high costs. Unlike Netflix (NASDAQ: NFLX) (and similar streaming site Hulu), Facebook will take a more "Hollywood" approach to forge partnerships with celebrities and production companies currently popular in traditional television and cinema.
The scripted series will reportedly be modest in content; avoiding excessive adult themes, crude humor, and nudity. This decision is said to be an effort to appeal to a wide audience, namely those ages 13-30, but it may hurt the company for ultimately limiting the range of genres and maturity levels for videos. Business Insider predicts that Facebook is aiming at the younger demographic recently flocking to rival Snapchat (NYSE: SNAP).
A short lineup of expected content has already been released via NY Mag, including a competition show from the creators of American Ninja Warrior, a sitcom revival of MTV show Loosely Exactly Nicole, and drama series Strangers produced by magazine publisher Refinery29.
Where Facebook does have a clear advantage over competitors, such as Snap, Netflix, AMC (NYSE: AMC), HBO (NYSE: TWC), Apple, and Amazon, is in its massive current user base. Last week at the Facebook Communities Summit, CEO Mark Zuckerberg announced that the platform has close to 2 billion total users. This makes it evident that Facebook's decision to move into the video market is not just to keep up, but to get ahead of other companies.
Amongst so much competition, it's not yet clear whether this new content platform will catch on with viewers enough to make Facebook their default video-streaming destination. One simple thing is for sure, though, if the content curation is high-quality and widely talked about, users will make sure that they watch what Facebook has to offer.