Discovery’s NowThis social media video platform and other content creators need better monetization opportunities from Facebook, according to BTIG analyst Rich Greenfield.
In a research note (sub. req.), Greenfield pointed toward Discovery CEO David Zaslav’s comments during this week’s earning call regarding NowThis being one of the top two or three video content providers on Facebook. Zaslav described meeting with Facebook recently to discuss how NowThis can monetize those views.
But Greenfield said that, while videos running on Google’s YouTube can be monetized through ad sales, on Facebook video providers can only make money by finding sponsors for videos. Meanwhile, the increased traffic from videos like NowThis’s allows to Facebook to increase profit on ads sold within users’ feeds.
“But NowThis is making nothing on it,” wrote Greenfield. “It is hard to believe this is sustainable for content creators. Given how short the video was, is pre-roll or mid-roll really tenable? Or does Facebook simply need to find a way to pay content creators who post on their platforms?”
Discovery, of course, now holds a 39 percent stake in NowThis following its recent $100 million investment in Group Nine Media, a company that houses Thrillist, Seeker and The Dodo, along with NowThis. Discovery retains the right to purchase a controlling share at a later date.
With NowThis, Discovery has access to a video outlet capable of generating millions of views and shares on Facebook within a matter of days, but no viable way to make money off the viewership.
As Greenfield points out, cashing in on social and mobile video strategies will become increasingly important for programmers as traditional linear TV advertising revenue becomes less reliable.
“We believe MVPD subscriber losses will continue to accelerate, along with the shift of TV viewing away from live linear TV to on-demand, ad-free/ad-light consumption,” wrote Greenfield. “In our view, this will put significant pressure on media companies to boost linear TV CPMs and find new ways to monetize on mobile/digital platforms.”