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2 Companies Threatened by Facebook's Live Video Ambitions

By Andrew Tonner - Apr 17, 2016 at 2:00PM

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Facebook is employing new tactics in its efforts to challenge Twitter and YouTube for a greater share of users' attention.

Image source: Facebook.

To borrow from The Lord Of The Rings, Facebook (FB 4.24%) wants to become the one social media network to rule them all. 

That isn't to say Facebook doesn't face threats, but Facebook's favored tactics of either acquiring or crushing its competition have worked to great effect in recent years. Case in point: Facebook's recent efforts to scale its budding video ecosystem should only intensify its competition with its main social media rivals.

Money talks
In early March, news broke that Facebook had begun actively courting celebrities to begin streaming live videos using Facebook's newest product, Facebook Live. What's more, Facebook is reportedly offering financial incentives -- aka, cold, hard cash -- to help spur Facebook Live adoption in the face of video-intensive rivals including Alphabet's (GOOG 2.32%) (GOOGL 1.88%) YouTube, Twitter's (TWTR 6.35%) Periscope, and Snapchat.

Then, earlier this month, additional reports surfaced that Facebook had moved beyond courting celebrities and had officially begun courting major media outlets as well to distribute original branded content via Facebook Live. Names of major publishers including The New York Times, Huffington Post, and Vox Media have all been confirmed as participating in Facebook Live's paid program, which is still in its early stages.

Like Instant Articles before it, Facebook Live creates an interesting trade-off for the publishing community. To gain access to Facebook's truly gargantuan user base, content producers lose control of their distribution, at least to a certain degree. However, what they lose in control, they ideally make up in terms of additional revenue generated from increased page views as they build their audience, and now added financial incentives from Facebook itself. Prior to this news, Facebook had never (reportedly) actually provided users with financial incentives.

Either way, this represents an interesting case study in Facebook's growing importance within the publishing world. It also figures to be very bad news for Facebook's video-based competitors.

Image source: YouTube.

Bad news for YouTube and Twitter
Anytime Facebook puts in a concerted effort to gain market share, incumbents in that space, or their investors, should take notice. As such, anyone associated with Twitter or YouTube would do well to pay close attention to Facebook's machinations here.

In some way or another, their ability to source video from outside producers, especially celebrities and other influencers, has been critical to the growth strategies of YouTube, Twitter, and even Snapchat. For Alphabet, the ability to distribute content to a massive user base of over 1 billion viewers has been the seminal force behind YouTube's rise to become the second-most-visited website in the world. And as Alphabet gradually nudges YouTube toward profitability, the company clearly believes its cadre of content from influencers will prove critical in supporting new monetization strategies. However, added competition for content distribution from Facebook threatens to create a potential scaled alternative to the very influencers Alphabet clearly covets. The same could be said for Twitter.

Unlike YouTube, Twitter's interest in video content is a relatively recent development. Though Twitter bought video clip service Vine in 2012, the struggling microblogging platform has been increasingly bullish on its live video service, Periscope, as it searches for ways to attract new users. As part of the recent PR flurry surrounding Twitter's 10th birthday, co-founder and CEO Jack Dorsey went to great lengths to tout the growth potential he sees in Periscope.

Though live video has existed for years, Twitter's Periscope has drawn excitement for its promise to offer distributed live broadcast from users' mobile devices. Facebook has made other efforts to compete with Twitter's Periscope product, though, and its ambitions to court influencers and publishers should only strengthen Facebook's value proposition over Twitter's Periscope as the two continue to battle for users' attention.

Social media is often referred to as "new media" by virtue of its disruptive effect on the publishing establishment, which Facebook's efforts to scale Live certainly demonstrate. However, Facebook's moves here also only up the ante in its growing rivalries with YouTube and Twitter.

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Meta Platforms, Inc. Stock Quote
Meta Platforms, Inc.
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Alphabet Inc. Stock Quote
Alphabet Inc.
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Twitter, Inc. Stock Quote
Twitter, Inc.
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