Facebook The Media Company If It Looks Like A Duck
20,000 Foot View: Facebook beat financial analyst estimates with its XXX 2016 earnings but announced that ad revenues would likely slow in 2017, due to the digital ad market feeling the pinch of advertiser budgets, which are lagging behind the shift in user behaviour. Facebook’s stock fell by XXX but Plan B is already in motion: to become a media company. Facebook delayed this move as long as it possibly could, showing little enthusiasm for getting bogged down with content licences while it was able to drive audience growth and engagement by piggybacking on other people’s content. That strategy has run its course. Facebook is now about to start looking and behaving much more like a media company, but in doing so it will rewrite the rulebook on what a media company is.
- Facebook’s combined portfolio of Messenger, WhatsApp and Instagram give it a XXX share of the global messaging app marketplace
- Facebook’s messaging app strategy is shifting audience time to platforms that Facebook is currently less able to monetize
- At the end of XXX 2014, Facebook Messenger MAUs were just XXX of all Facebook users, but by the end of XXX 2016 the share had risen to XXX – virtual saturation
- Facebook has two strategic imperatives: XXX get users more engaged on its core platform, and XXX build new revenue streams for them XXX of consumers watch videos on Facebook, representing XXX of Facebook’s weekly active users
- Facebook has become a one trick pony – XXX of Facebook’s 2015 revenues were from advertising
- To offset slowing ad revenue, Facebook needs to create a suite of new revenue streams, the sum of which will be transforming itself into a media company
- The XXX billion mobile and PC gaming industries are the standout addressable segments for Facebook
- Filters, live streaming, TV, video and music are all other areas in which Facebook could explore monetization
- Convincing Wall Street that its long-term strategy justifies a near-term struggle is almost as important for Facebook as executing the strategy itself
Companies and services mentioned in this report: Alphabet, Amazon, Apple, Facebook, Instagram, Messenger, Musical.ly, Pandora, Spotify, WhatsApp, YouTube.