Facebook Puts 'Video First'

During another glowing quarterly earnings call, Facebook CEO Mark Zuckerberg talked about the company's plans to make video the primary mode for Facebook users.

Mitch Wagner, Executive Editor, Light Reading

November 2, 2016

5 Min Read
Facebook Puts 'Video First'

Facebook is pivoting again -- after transforming from desktop to mobile, it is now putting video front and center on its multiple platforms.

For most social applications, the text box is the main way for users to share. "Soon, we believe a camera will be the main way we share," Mark Zuckerberg, Facebook founder and CEO, said on the company's quarterly earnings call Wednesday. (See Facebook Reports $7.01B 3Q 2016 Revenue.)

Facebook is optimizing its main app, as well as its Instagram, WhatsApp and Messenger, for video capture and sharing.

"People are creating and sharing more video and we think it's pretty clear that video is only going to become more important," Zuckerberg said.

Traditional, on-demand video "is the vast majority of video that is both shared and consumed on Facebook," Zuckerberg said. But live video is the future. Live video involves interacting with other people, whether it's public figures holding a town hall with hundreds of thousands of people, or just ten people hanging out with friends. Live video is "not the more traditional video experience. It's a more social experience," Zuckerberg said.

360-degree video and Instagram Stories are examples of other forms of emerging interactive video, Zuckerberg said.

Since it launched in May, Facebook Live has grown 4x, with Facebook users going live from all seven continents and outer space, Zuckerberg said. Facebook's Instagram Stories, which launched in August, has more than 100 million daily active users.

Technology has only recently improved to the point where mobile video is practical, allowing people to generate and consume videos without unacceptable buffering and wait times, Zuckerberg said.

Facebook's decade of building out infrastructure enable it to deliver video globally, Facebook says.

To encourage and enable video production, Facebook is rolling out new creation and capture tools to its users. It's testing a new camera app in Ireland, and will roll it out broadly when it's ready. Messenger is testing My Day, similar to Instagram Stories, Zuckerberg said.

"In the main Facebook app, video is naturally becoming a larger share of the content in News Feed, because both people and pages are sharing more video in the mix and people want to consume that content," Zuckerberg said. And Facebook is testing Video Home, a center to allow people to watch and discover videos on Facebook.

Facebook's advertising -- which is how it derives nearly all its revenue -- complements traditional television ads, COO Sheryl Sandberg said. Most advertisers are on both TV and mobile -- "and they should be," she said.

Facebook's power when compared with television is in targeting. "Big brand advertisers are recognizing they can do big brand buys like TV, and make them more targeted," Sandberg said.

For example, for a campaign, Purina defined five different cat owner personality type and created ads for each group. The company got 89% increase in brand awareness and 20% increase in sales. "We think what we offer is the power and broad reach of TV, but the ability to target more specifically," she said.

As for Facebook's financial results: Mobile ads helped Facebook clobber Wall Street expectations, beating analyst expectations for earnings and revenue for the sixth straight quarter.

Mobile ad revenue was 84% of all ad revenue for the third quarter, up from about 78% year-over-year.

Net income tripled to $2.38 billion year-over-year, with earnings per share of $1.09, up from 57 cents a year earlier. Analysts had expected 97 cents profit.

Revenue was up 56% to $7.01 billion in the third quarter, beating estimates of $6.9 billion. Mobile ad revenue was 84% of total advertising revenue, up from 78% year-over-year.

More numbers: Daily active users (DAUs) were 1.18 billion for September, up 17% year-over-year. Mobile DAUs were 1.09 billion, up 22% year-over-year. Monthly active users (MAUs) were 1.79 billion as of Sept 30, up 16% year-over-year, and mobile MAUs were 1.66 billion, up 20% YoY.

Despite the good financial results, Facebook stock traded at $127.17, down 1.8% after hours.

Sports was a big driver of interaction for Facebook, with 270 million people creating 1.5 billion interactions for the Summer Olympics. Athletes shred prominently on Facebook, with Michael Phelps announcing his retirement on the service, Zuckerberg noted.

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Elections have driven engagement on Facebook as well. Voters and candidates are using Facebook to communicate, with 109 million people interacting about politics in the first nine months of the elections, Zuckerberg said. The service's voter registration app helped more than 2 million people sign up to vote.

"Facebook really is the new town hall," Zuckerberg said.

On the importance of politics on Facebook, Zuckerberg is only telling part of the story. Politics is certainly a prominent topic on Facebook -- anyone who's checked their News Feed (or avoided checking the News Feed) lately can tell you that. But Twitter is also a major source of political news and discussion. As @RealDonaldTrump would say, politics is yuuuuuge on Twitter.

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— Mitch Wagner, Follow me on TwitterVisit my LinkedIn profile, Editor, Light Reading Enterprise Cloud

About the Author(s)

Mitch Wagner

Executive Editor, Light Reading

San Diego-based Mitch Wagner is many things. As well as being "our guy" on the West Coast (of the US, not Scotland, or anywhere else with indifferent meteorological conditions), he's a husband (to his wife), dissatisfied Democrat, American (so he could be President some day), nonobservant Jew, and science fiction fan. Not necessarily in that order.

He's also one half of a special duo, along with Minnie, who is the co-habitor of the West Coast Bureau and Light Reading's primary chewer of sticks, though she is not the only one on the team who regularly munches on bark.

Wagner, whose previous positions include Editor-in-Chief at Internet Evolution and Executive Editor at InformationWeek, will be responsible for tracking and reporting on developments in Silicon Valley and other US West Coast hotspots of communications technology innovation.

Beats: Software-defined networking (SDN), network functions virtualization (NFV), IP networking, and colored foods (such as 'green rice').

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