Facebook's video strategy is struggling, analyst says

Facebook Urging Long-Form Video
Facebook Watch (Facebook)

Facebook may have good reasons for pursuing video, but analyst Michael Nathanson still sees some major faults and missteps in the social media platform’s current strategy.

In a research report, Nathanson said that video appeals to Facebook because it could help the company capture more TV ad dollars and also it could help regrow or at least slow the decline of engagement on the platform from younger demographics.

“However, Facebook’s video strategy remains a bit unclear. We understand the long-form professional produced content strategies at Netflix, Amazon, Hulu and traditional media players, as well as how news and sports fit in. We can also identify the incredible value at the other end of the spectrum with YouTube and its immense repository of user-generated content. However it’s the middle of that spectrum (medium form, USG/semi-professional content) that remains a head-scratcher with a somewhat unclear value proposition and content that doesn’t appear to be overly compelling,” wrote Nathanson.

So far, Facebook has offered both user-generated and short- and medium-form professionally produced content. That content is housed in Facebook’s Watch tab under “Discovery” and “Watchlist.”

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“We don’t think it has been terribly successful here, and wonder how many users even realize or opt to click the Watch tab when on Facebook,” wrote Nathanson.

Nathanson said that, based on his firm’s L.A. Media Tour in November, Facebook is not being aggressive in going after content from studios and smaller video creators. He said that Facebook needs to go after “blockbuster long-form content” in order to jump-start its video initiative. He also cited a recent Wall Street Journal report about Facebook changing its video ad monetization strategy and said that the creator community likely doesn’t appreciate all the experimentation, like the shift toward six-second preroll ads and the altered guidelines for midroll ads.

“While we applaud these actions and note that it is a clear move to become more YouTube-esque, the problem is that Facebook has really frustrated producers by continually changing what it is looking for in video content,” wrote Nathanson, adding that Facebook’s payment structure still isn’t “advantageous to creators just yet.”

Finally, Nathanson said that any benefits from Facebook’s video rollout will come at a high cost by taking users away from the News Feed, which has been “incredibly profitable” for the company.