Facebook is flush with cash, and it is willing spend big on becoming a major player in video.
Rumor has it the social media behemoth will soon be spending upwards of $1.2 billion dollars to create original content for its platform.
And total investment could be more depending on the success of the programming. The impending investment in video content outpaces earlier investments – including live-video deals made last year.
Facebook’s stated goal is to position itself as what CEO Mark Zuckerberg calls a “video-first” platform. As consumers migrate from television to digital devices, Facebook looks to compete with other major and deep-pocketed players such as Apple, Amazon, Netflix, and Time Warner Cable’s HBO platform.
“Our read-through is that Facebook is likely willing to spend billions of dollars to buy rights for content that might otherwise appear on TV,” Pivotal Research analyst Brian Wieser wrote in a recent note.
The major move into video only makes sense as Facebook looks to expand into new avenues of revenue as it core business begins to slow down.
Zuckerberg has previously resisted paying for video content, but has relaxed his views somewhat, confident that eventually the expansion will be financed through an ad revenue-sharing model.
The good news is that controlling eyeballs of consumers is one of Facebook’s advantages over other players. Facebook boasts a whopping 2 billion users, more than a quarter of population of planet earth!
Facebook is also looking to expand its reach into the sporting realm. They recently bid more than $600 million for the rights to stream cricket matches in India from 2018-2022. Yes, Cricket!.
The move did not come to fruition however, having lost its bid to 21st Century Fox’s Star India which reportedly bid $3.2 billion for digital-streaming and broadcast right. Who knew that Cricket was so popular!
Bidding over $600 million to broadcast cricket matches in India surely raised some eyebrows in the industry. After all, the Indian advertising market is a fraction of what it is in the United States.
The company is also reportedly in negotiations with record companies to secure the rights to music intended to be available for users to play as background music in the videos they upload to Facebook.
CEO Mark Zuckerberg recently approved a budget of more than $100 million to pay publishers to use its live-video product. As a result, one in five videos posted on the site are live broadcasts.
The bottom line is that video will be driving the internet for many years to come, and there will be tens of billions of dollars spent to gain consumer attention going forward.
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