Facebook’s video strategy of encouraging users to upload and consume videos is surely paying off. It has officially become the center of the company’s quarterly earnings report.
Videos important to Facebook
On Wednesday afternoon during the company’s Q4 earnings call, video was once again the focal point for analysts. But even now, the social network has not shared everything about its video business, like, for example, the revenue it is making from it.
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However, the company is very clear about how important video is for its business. To prove its importance, Facebook shared some numbers. CEO Mark Zuckerberg said that on a daily basis, 100 million hours of video are consumed by users, and there are 500 million people who watch videos on a daily basis on the platform.
“We’re also exploring ways to give people a dedicated place on Facebook for when they just want to watch videos,” Zuckerberg said.
Facebook’s focus on video is not new. It has been pushing into video for years and has been trying to persuade advertisers to spend a part of their television budgets on Facebook ads instead. It is really tough to estimate how big Facebook’s video business is as the company does not break out its video ad revenue.
More videos, more revenue
It is a bit difficult to quantify the metrics shared by Zuckerberg. Nevertheless, they matter a lot since Facebook’s advertising strategy will follow user behavior. In simple terms, it can be said that more video consumption means more video advertising, and more advertising means more revenue for Facebook since video ads are usually more expensive. Re/code asked COO Sheryl Sandberg if Facebook’s video ads succeeded at stealing some TV ad dollars, to which she replied that budgets have started making a shift.
“In terms of replacing TV, we certainly don’t think we’re going to replace any one medium,” Sandberg said, adding that eye balls are definitely shifting to mobile from other formats such as TV. “And we are positioned very well to not just participate but to lead that shift.”
On Wednesday, Facebook shares closed down 2.97% at $94.45. Year to date, the stock is down by almost 10%, while in the last year, it is up by over 21%.