Facebook (NASDAQ:FB) debuted its Live video feature this year and it's already producing some great results for the company. The social media powerhouse says that its users watch live videos three times longer than ones that are no longer live.
Facebook wasn't the first to bring live video to social media, of course. Twitter (NYSE:TWTR) bought the live video-streaming company Periscope last year and has been increasing its live video plans since then. And even before that YouTube, under Alphabet's Google, allowed users to live stream from their desktops. It's since announced that live streaming will come to its mobile apps as well.
It's easy to think that live video is just another ploy to get users to stay engaged with social media platforms (part of it is, of course), but there is also proof that users enjoy live video, have higher engagement rates with it, and that the platform opens up new revenue opportunities.
Here's what we know so far:
- Facebook users comment 10 times more on live videos than they do on regular videos.
- 15% of the "top brands" are already using Periscope to reach audiences, according to Twitter.
- Periscope has had 200 million broadcasts to date, and as of last August has 10 million registered users and 1.9 million daily active users.
- Twitter just paid $10 million in a deal to live stream NFL games this coming season, and is hoping to bring in at least $50 million from ad sales from the live NFL streams and highlight content (which it will have to split with the NFL), according to Recode.
- Facebook just paid $50 million to media companies and celebrities to produce live videos on its platform.
- A recent Wall Street Journal article noted that 11% of the top 500 Facebook pages run by media companies had made a live video back in January, but that percentage increased to 44% by May.
It's also worth mentioning that Twitter just signed deals to live stream a handful of daily Bloomberg TV shows, as well as both the Democratic and Republican conventions (pronounced: carnivals) later this month.
Of course, the above facts don't necessarily prove that live video won't flop. But they do indicate that both Facebook and Twitter are making big investments for its success and that their users are responding well so far.
On its Q1 2016 investor call Twitter's COO Adam Bain answered a question about Periscope's monetization by saying,
We actually are monetizing Periscope and Vine by bringing that creative canvas into Twitter and allowing marketers to bring that canvas into Twitter and do targeting campaigns and measurement through the tools that we have available on the platform.
There's no specific revenue number for Periscope right now, but Twitter is clearly looking to video to boost its platform. The company mentioned in the quarterly earnings report that live video is one of four key areas it's focusing on this year and Bain went on to say on the call that, "... we see a clear opportunity ahead to increase our share of the brand advertising market, especially around video." Twitter's revenue from video ads tripled year-over-year in Q1, and live video could spur additional ad buys.
Facebook CEO Mark Zuckerberg has said that he's "obsessed" with livestreaming. That's telling enough when you pair it with Facebook's recent investment in live content, not to mention that it's the first time Facebook is really focusing on content that's happening right now.
But the payoff will only be worth it when investors see how much of the advertising pie Facebook and Twitter are able to snatch up with their live videos. Advertisers are expected to spend $9.9 billion in digital video spending this year and $28 billion by 2020, according to Cowen and Company. Not all of the video ad spending will come from live video, of course. But Facebook and Twitter are already seeing the benefits of live video for their users, and it's likely advertisers are taking notice as well.
You could call live video a fad right now if you want, but that sentiment will likely change as Twitter and Facebook perfect their live video platforms and roll out new ways to monetize them. This could take time, so investors should stay patient. We're only at the beginning stages of live social video after all.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Chris Neiger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Facebook, and Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.