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YouTube Is Losing This Top-Tier Content to Facebook Inc.

By Adam Levy - Jul 14, 2015 at 9:00AM

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HBO and Amazon are some of the first to upload television content to Facebook instead of YouTube.

Dwayne Johnson stars in HBO's Ballers. The first episode is available on Facebook. Source: HBO.

The last few weeks haven't been kind to YouTube. Google (GOOGL -0.61%) (GOOG -0.55%) is struggling to get its premium subscription service off the ground, and more importantly, it's seen two high-profile digital video deals go Facebook's (META -2.03%) way instead of its own. In short order, both Amazon and HBO promoted their new series by uploading them directly to Facebook.

Promoting pilots with a free digital sneak peak isn't new, but it's an area YouTube once dominated. In fact, HBO originally released the premieres of Girls and The Newsroom on YouTube several years ago. But in 2015, Facebook is the preferred platform, and the reason is simple. Facebook provides more reach.

Similar user numbers, but better engagement
YouTube is one of the few platforms that can boast nearly as many visitors as Facebook. However, when it comes to actual engagement, Facebook's native videos hold a handy advantage over those embedded from YouTube. A recent study from Socialbakers found that native videos receive nearly four times the engagement compared to YouTube videos on Facebook.

So, it's obvious why HBO and Amazon would upload their content directly to Facebook for promotional purposes, but Facebook was able to convince them to keep the episodes exclusive to its platform. The superior performance of native video on Facebook was enough for the company to leverage exclusive deals with both media companies. It's that sort of leverage that should worry YouTube.

Some of YouTube's most popular content is repurposed from television broadcasts. Late night talk shows have adapted to the online video era, creating snackable clips that do wonders to promote the show. Other networks use YouTube to show clips from previous or upcoming episodes to get users to tune in.

But Facebook may ultimately prove a better platform for promoting television broadcasts. First, Facebook already knows which TV shows and celebrities you like, and in some cases, it even knows if you're a cable subscriber. Second, Facebook uses a passive feed to display videos as opposed to a platform that requires you to know what you're looking for. So, Facebook can use its targeting data to help promote shows for networks in exchange for something like exclusive rights to clips, or even full episodes.

We may see a shift sooner rather than later
YouTube is working to create a premium subscription option for viewers who prefer not to watch pre-roll advertisements. But the company has run into problems involving networks with exclusive streaming deals with other premium video services like Hulu Plus. Those deals allow clips from shows to appear for free on other services, but if a user is paying for YouTube, those clips may have to be blocked.

YouTube will have to work around those restrictions, or risk losing access to some of its most valuable content. With Facebook in the picture, YouTube no longer has as much leverage to hold over media companies, many of which could be better off uploading videos directly to Facebook. Meanwhile, Facebook has an opportunity to leverage its popularity and natural promotional capabilities to steal away content.

Facebook television
So far, Facebook's push into video has been mostly user-generated amateur content. And while the majority of content on YouTube is still amateur videos, one of the biggest draws to YouTube's app and website are clips and other promotional content from networks.

Those clips are important to YouTube's business since it doesn't have a feed most users come to check regularly. Networks want that feed. That's why we've seen HBO and Amazon tap Facebook recently.

More networks will likely start uploading videos to Facebook in the near future. The question is whether Facebook can convince them to stop uploading clips to YouTube.

Adam Levy owns shares of The Motley Fool recommends, Facebook, Google (A shares), and Google (C shares). 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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