Facebook (NASDAQ:FB) has big plans for 2015. At least, that's what CFO Dave Wehner led investors to believe when he noted in a recent conference call that the company's operating expenditures are going to rise significantly next year, on the order of 55% to 75%. That increase is well above the average $1 billion increase we've typically seen in Facebook's OPEX each year, figuring to be closer to $2.5 billion at the midpoint of Wehner's guidance.
Facebook invested a lot in acquisitions this year, which will naturally lead to higher OPEX next year. But Facebook CEO Mark Zuckerberg mentioned on the company's third-quarter conference call that those acquisitions don't get really interesting for Facebook until they reach 1 billion users. Of its acquisitions, only WhatsApp has the potential to reach 1 billion users next year. So, what should we expect from Facebook in 2015?
Improvements to WhatsApp
The newly acquired mobile messaging service WhatsApp already has over 600 million monthly active users, and it's adding new active users at a rate of 300 million per year. Even with that huge user base, WhatsApp brought in just $15.9 million in revenue during the first half of 2014.
Now, Facebook is feeling the pressure from Wall Street to justify what eventually became a $21.8 billion acquisition. It's not clear if we'll see additional monetization efforts for WhatsApp in 2015, but we'll certainly see efforts to corner the mobile messaging market.
To that end, WhatsApp plans to launch a voice calling feature in the first quarter of the year. That's something that's been in the plans for a while, but it's been difficult to get right. Facebook already offers voice-over-IP calling through its Messenger app, so it will be able to help accelerate the launch.
This could be a path to better monetization for WhatsApp. One mobile messaging app, Line, already offers voice calling. It's free to call other Line users, but it offers low international rates to make calls to any phone number. Likewise, Microsoft's Skype has grown from a piece of video chat software to one of the main ways we communicate internationally -- making actual profits for Microsoft in the meantime.
Video is a very big priority
In August, Facebook technically had more video plays than YouTube on desktop computers. Facebook's autoplay functionality is inflating that number, though. The company says its users now view more than 1 billion videos per day on average.
In 2015, investors should look forward to efforts to increase video engagement as well as ways to monetize all of those video views. The company bought LiveRail, a supply side video ad platform, earlier this year. LiveRail helps customers monetize their video inventory. Facebook may look to incorporate LiveRail's platform into its video products to help publishers (and itself) make some money off those billions of Facebook video views.
Adding revenue sharing will encourage more video makers to upload videos directly to Facebook, but the company has several incremental improvements to make to its video product as well. Investors should look for improvements to video that will help users find videos to watch and encourage publishers to share videos directly on Facebook.
The revenue opportunity for Facebook's video views is absolutely massive, so investors should watch for any progress to improve the product or monetize content.
Expanding the Internet
Facebook heads up the Internet.org initiative launched last year to connect everyone in the world to the Internet. The company has made progress in 2014 improving Internet access in countries like Zambia and Tanzania.
To provide Internet access to areas of the world with poor technology infrastructure, Facebook is investing and experimenting heavily. Earlier this year, the company bought Titan Aerospace, a maker of solar-powered drones. Facebook is experimenting with placing drones in the sky above underserved areas of the world to carry Internet signals to them. Since they're solar-powered, they'll have minimal environmental impact and can spend years up in the air.
In order for Facebook to continue growing, it needs to expand its addressable market. About two-thirds of the world still doesn't have consistent access to the Internet, so providing people with access and giving them Facebook as their introduction to the Internet is the only way for the company to continue expanding its user base.
Lots of spending on big products
While I've listed three areas where Facebook will be investing heavily in 2015, there are quite a few other areas Facebook will look to improve. Zuckerberg thinks the company can still make improvements to Newsfeed by improving the way people find and share news and how public figures reach an audience. COO Sheryl Sandberg thinks the company can still improve its ad-tech and advertising products for both small and large businesses.
Overall, this year's acquisitions will translate into higher operating expenses next year, and investors can expect to see improvements in three big products: WhatsApp, videos, and Internet access.
Adam Levy has no position in any stocks mentioned. The Motley Fool recommends Facebook. The Motley Fool owns shares of Facebook and Microsoft. 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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