YouTube generated an estimated $5.6 billion last year, while Facebook generated $0 selling advertising against its video content!
Confronting the fact that YouTube is the runaway favorite destination for video content postings and views, Facebook is taking their competition’s playbook and beginning to compete directly for that same content, audience and ultimately revenue stream.
Facebook recently deployed a proprietary video player that will publicly display how many views a video receives. This is a clear shot across the bow of YouTube to prove to their channel members and advertisers they they can play this game too.
YouTube rewards content providers with high view counts with a cut of their ad revenues, so views are the de facto currency of the online video marketplace.
Facebook’s videos are also auto-play enabled, so the content provider is guaranteed a view if the content is called on a given page, while YouTube videos are presented with a poster frame, requiring viewers to click to play those clips.
Facebook’s ad-recommendation algorithm also now gives preference to its new video player, furthering Facebook’s goal of becoming the most effective matchmaker on the Internet connecting advertisers with audiences.
Facebook also recently acquired LiveRail, an ad serving network. If/when Facebook were to add ads to pre-rolls on their propriety video player, that could drive a revenue-sharing program with original-content creators. They could also offer a greater cut of those revenues than the current 45% that YouTube splits with its creators.
YouTube reported more than 1 billion monthly viewers, while Facebook reported 1.3 billion in Q2.
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