Can Live Streaming On YouTube Prove To Be A Serious Threat For Facebook?
While it continues focusing heavily on videos, Facebook (NASDAQ:FB) is now facing strong competition in this space. Recently YouTube announced that it had updated its mobile app to allow live video streaming to any YouTube creator with 10,000 or more subscribers. This option will be opened up to other users who set up a channel for advertising-share revenue, later this year. Facebook’s live video sharing platform was opened up for public broadcast last year and the company continues to encourage celebrities to go live on its platform. Earlier this year, Facebook started testing mid-roll advertisements in videos on its platform and introduced a revenue sharing model similar to that of YouTube. While YouTube’s popularity as a video platform surpasses that of Facebook, the content offered on both platforms differs. Live streaming on YouTube would be by content creators and hence these videos are likely to be more professional and informative. Facebook on the other hand allows its users to broadcast events live, this making these videos more personal and for the consumption of friends and family. However, from a commercial perspective Facebook is looking at content creators to broadcast more high quality videos on its platform and here it will face direct competition from YouTube’s live feature.
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YouTube’s Expertise In Videos Can Give It A Competitive Edge
While YouTube’s billion users are lower in number than Facebook’s 1.8 billion figure, the former has invested heavily on helping creators to make high quality content for its platform. The company has a production facilities around the world called YouTube Spaces where, even as of March 2015, creators produced over 10,000 videos that generated more than a billion views. And as of July 2016, the company had paid out $2 billion to right holders who have chosen to monetize their claims on its platform.
Facebook has not invested significantly in acquiring rights for videos but is now working with creators on a revenue split model. Recently the company started testing a mid-roll ad format and announced a 55-45% revenue split with publishers, exactly similar to YouTube. With a similar revenue sharing arrangement, publishers are likely to choose a platform where they can attract more advertisers. Facebook has a larger user base and a high level of user engagement, which can work to its advantage. However, results of an experiment conducted to identify the better video advertising platform between YouTube and Facebook revealed that the completed views were higher on YouTube and the cost per quality watched minute on YouTube is cheaper. This was primarily because Facebook has an “auto play” option which can lead to “unengaged” user views. Indeed, the number of digital video advertisers is increasing significantly. (eMarketer expects digital video spending to reach nearly $ 17 billion by 2020.) Yet they are likely to prefer a platform which gives them better value for their investment.
Both Facebook and YouTube are competing for a higher share in this market and both have certain advantages to attract advertisers. However, YouTube remains a very strong competitor for Facebook in the digital video segment. As viewership of live videos on mobile devices increases over the next few years, the platform that is able to provide cheaper quality viewing time for advertisers is likely to win this battle.
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