Teenage girls everywhere can celebrate. The Twilight Saga continues.
Lions Gate Entertainment (NYSE:LGF-A) is teaming up with Facebook (NASDAQ:FB) to release five short films based on the Twilight series. The shorts, which are slated to debut next year on Facebook, are aimed at capturing the attention of Facebook's younger audience. A lot has been made of Facebook's struggles engaging teens, and short videos are capable of keeping those young eyeballs glued to their Newsfeeds.
But Facebook may have a much larger agenda than teenagers. The company is pushing hard into video and partnering with Hollywood studios represents a serious threat to Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) YouTube. The Facebook films telling the stories of various Twilight characters will be called "The Storytellers — New Creative Voices of ‘The Twilight Saga' ". The directors will be women.
Twilight was huge for Lions Gate. The franchise has raked in more than $3.3 billion at the box office worldwide. Injecting new life into the franchise through Facebook could help Lionsgate sell more DVDs or content rights. What's more, it can use the short-film releases to promote its other hugely successful female-driven franchise, Hunger Games.
For Facebook, Twilight resonates with a younger audience. With more and more alternative social networks attracting teenagers, Facebook has come under fire in recent quarters for admitting it has seen relatively lower engagement among young users. Snapchat, for example, represents a growing threat to Facebook as it cuts into the amount of photo sharing on the most popular social network.
Lions Gate has worked closely with Facebook in the past. In December, the film studio created a teaser for Divergent, which became Facebook's first video ad. Michael Burns, Lions Gate's Vice Chairman, said, "This is just the beginning -- a template if you will." Clearly, Facebook's audience of 1.3 billion people is very enticing for the studio.
Taking on YouTube
YouTube is about the only platform that comes close to rivaling Facebook, but Facebook's push into video is becoming a real concern for the most popular short-video website. This summer, with the help of the Ice Bucket Challenge, Facebook saw an average of 100 million new videos uploaded to the website every month. Comparatively, YouTube sees 100 hours of video uploaded every minute, which, at an average length of four minutes, is only about 65 million videos per month.
Last month, Facebook reportedly approached some of YouTube's most popular content producers to persuade them to upload videos directly to Facebook. With more than1.3 billion active users, Facebook's audience is still more than 30% larger than YouTube's 1 billion unique visitors per month. That's certainly an opportunity for content producers to attract a larger audience; but Facebook still has a lot of work to do to overcome YouTube's mindshare as the place to find short videos. Helping create original content -- possibly exclusive content -- will help change that, to some degree.
Facebook has a lot to gain with a foothold in video. Video ads carry a premium over typical display ads, which will allow Facebook to continue raising its average price per ad. Additionally, native video keeps people on the site longer. Typically, people share videos directly from YouTube, which often sends traffic to YouTube, leaving Facebook behind.
YouTube isn't lying down
YouTube isn't standing by as Facebook tries to poach its top content. The company is partnering with its top producers to create more original content -- offering them studio space and the chance to work with Hollywood producers.
It tried to attract outsiders to its platform a couple of years ago, and largely failed. This time, however, it's promoting content that's already popular on YouTube, which stands a much better chance of success. The new deals give YouTube an exclusive window, and also gives YouTube a way to participate in any compensation if the content goes to other formats, which might lock out Facebook from grabbing the content.
The deal with Lions Gate is one way for Facebook to respond to YouTube's newest original content initiative. I expect Facebook to look to other producers to continue its video content push. More video content should help Facebook boost engagement while increasing ad prices -- resulting in continued revenue growth.
Adam Levy has no position in any stocks mentioned. The Motley Fool recommends Facebook, Google (A shares), Google (C shares), and Lions Gate Entertainment. The Motley Fool owns shares of Facebook, Google (A shares), and Google (C shares). 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.
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