BY BRENDAN GAHAN
DEC 05, 2017
Stop me if you’ve heard this one: Facebook is crushing Snapchat. Well, forget that, because I’m interested in a much bigger tech company Facebook is poised to overtake: Google’s YouTube.
Facebook has managed to grow, outpace, and marginalize its competitors thanks to its huge user base, massive data collection operation, and the breakneck speed at which the Facebook engineering teams execute. We’ve seen Facebook steamroll several social networks over the years.
Now, Facebook is taking video more seriously than ever with its new product Watch, and I predict it will ultimately overtake YouTube as the biggest video players.
What exactly is Facebook Watch?
While video has been a focus of Facebook’s for the last several years, Watch is the company's first effort to brand video as a standalone property. It received its own name, logo, and dedicated tab on Facebook, not unlike previous standalone Facebook products such as Messenger, which now has its own dedicated app.
Facebook's Watch tab rolled out to everyone in the U.S. in August.
Watch’s features include a “Discovery” page that recommends new content, a dedicated feed for videos comments and reactions to videos, show-specific Facebook groups, and new Watch pages. For creators and publishers, Watch is presented as a platform to help them build an audience of passionate fans and make money from their work.
Why Facebook Watch will overtake YouTube
Other than Facebook’s competitiveness on features, there are several other reasons why Watch will be a success:
Mark Zuckerberg has stated that video is a priority for the platform, telling that we’re now in the golden age of video and that he “wouldn’t be surprised if you fast-forward five years and most of the content that people see on Facebook and are sharing on a day-to-day basis is video.”
While YouTube still boasts more video views than any other platform, statistics show that Facebook is closing in at high speed. Even before the launch of Watch, Facebook was generating of video watch time.
While YouTube’s watch time has been , Facebook doubled its daily video views within just six months in 2015 (April to October). Assuming Facebook’s video growth continues at this rate, it’s safe to say that daily video views (including Facebook Live) will remain at .
Mark Zuckerberg has repeatedly said video is a priority for Facebook.
IMAGE: GETTY IMAGES
Facebook’s emphasis on true identity means that it has a better understanding of what viewers want to watch both within Watch and across Facebook as a whole. While YouTube is known for anonymous trolls, Facebook has a strict “ and knows more “real” profile data on consumers than YouTube does. This will help Facebook serve more relevant video and a better experience to all.
Making speed a priority has allowed Facebook to build products and features that allow it to outpace competitors and perfect user experiences. This is part of the reason why Facebook-owned properties — Facebook, Messenger, Instagram, and WhatsApp — account for that the average consumer spends on mobile. Furthermore, Facebook is the with YouTube clocking in at number two.
Facebook has shown signs of early acceleration with the sharing of video content on Facebook having between July and September 2014, and between its launch in 2016 and July 2017, Facebook Live usage grew by .
How Facebook watch will become #1
Facebook Watch will eventually overtake YouTube via a three-pronged approach that will drive advertisers, viewers, and content creators toward the platform and away from YouTube.
While Facebook is becoming increasingly profitable, speculators believe YouTube is now on ad revenue, and Facebook is incentivizing advertisers to use their platform even more by promoting Facebook videos (those that have been directly uploaded) in its algorithm above all other content.
To tip the scales even further in Facebook’s favor, YouTube has had a rocky year with advertisers. In spring of this year, dozens of companies in Europe and the U.S. boycotted the platform after that ads were appearing next to offensive content. Major brands such as PepsiCo, Walmart, Dish, Starbucks, and GM all stopped running ads on YouTube.
The addition of a standalone video platform integrated into Facebook’s ad dashboard would turn the platform into a “one-stop shop” for advertisers. Facebook and Instagram are already the biggest social platforms with a shared media-buying dashboard. Integrating the three could further discourage advertisers from using YouTube.
To lure advertisers, Facebook needs inventory to run ads against. To accomplish this, Facebook has started paying for original content. According to , Facebook “is taking the risk out of the content-creation endeavor for many publishers, either by paying to offset their production costs or offering to license or buy their content outright.”
Facebook launched an app for creators in November.
Facebook also is sharing revenue on advertising with . This is exactly the same revenue split that YouTube has with content creators on its own platform as part of its . This revenue share program is a smart move on Facebook’s part and could be especially effective given the fact that numerous creators on YouTube are seeing massive declines in their .
Ultimately, Facebook needs an audience to keep advertisers and content creators investing dollars and video into the site. Facebook has proven over the years to be extremely adept at creating a “sticky” experience that keeps users coming back.
In 2016, Zuckerberg disclosed that the average person spent . Users in the U.S. spent an average of 35 minutes per day on Facebook, compared to YouTube with 17 minutes. In addition to higher time on site, Facebook has more users than YouTube, with more than two vs .
Facebook’s larger pool of users, access to more data, and emphasis on true identity means that it has a better understanding of what viewers want to watch both within Facebook Watch and across Facebook as a whole, allowing the platform to serve more relevant content and increase time spent on the site likely cannibalizing YouTube’s audience in the process,
Facebook has a history of investing — at breakneck speed — in order to stave off competitors and build the future of media consumption, communication, and technology. Facebook has WhatsApp for global instant messaging, Oculus for virtual reality, Instagram for images, and now Watch for video.
I predict Facebook will successfully leverage its network effect to create a better experience for advertisers, creators, and viewers, and ultimately put an end to YouTube’s decade-long position as the biggest video player.
It’s not that YouTube will disappear. Instead, it will likely become marginalized much in the same way Snapchat and Twitter now live in Facebook’s shadow. It’s just a matter of time.