By: Kathy Anton – Marketsmith Inc. SVP of Marketing
Over the past few months, Facebook has been inking deals with Hollywood producers and content creators, not just for branded short-form video content, but for “programming” as well. This month, the company greenlit two new original series; has begun testing live sports video; and recently signed a deal with Major League Baseball to show 20 games live this season. These moves are in preparation for its new video service, expected to launch by mid-August.
Short-form content makes sense, especially to appeal to millennials – think of the noise being made about Snap Chat’s “Stay Tuned” content from NBC News. But why the move to long-form video? Doesn’t Facebook get enough views on user-generated short videos and profit from sponsored short-form content already?
It’s all about our smart phones. With 56% of Facebook’s 2.01 billion active monthly users logging on solely through their mobile devices, mobile revenues continue to rise. In its quarterly earnings report released Wednesday, Facebook mobile ad revenue represented 87% of its ad earnings, up 84% versus last year. And with this new service kick-starting episodic viewing, Facebook is now out to grab a large piece of the 70 billion-dollar television advertising pie.
Just a few years ago, consensus was that people wanted to watch TV and movies on larger screens. Smaller mobile screens were OK for short videos, but wouldn’t hold viewer attention. But now, with Pew Research estimating that smart phone usage has increased by over 258% in less than 7 years – with 77% of Americans owning one – this is no longer the case.
More than 168 million users accessed video on their smartphone in the first quarter of 2017. And although traditional TV has far greater reach, at 292 million, smart phone views have already surpassed desktop and DVD viewing – and could, sooner than we think, significantly impact traditional TV advertising sales. With smart phone users projected to grow to 222.9 million by the end of this year, and an additional 31 million cable TV million homes expected to cut the cord in the next decade (probably a lowball figure), the shift from TV to smart phone viewing is inevitable.
Netflix just announced it reached 100 million total subscribers for the first time. A good part of that growth came from mobile – with monthly US mobile users growing 20% year over year, or an increase of 70 million. Americans spent about 7.5 billion minutes watching Netflix on their phones in June of 2017, according to data from media measurement company ComScore, a 73% increase since 2014.
Yes, people are watching long-form video on their phones. And they will be watching more and more as smart phones keep getting larger, with better screens for video viewing. From my own personal experience – I recently upgraded to an iPhone Plus – I find I am watching more and more video on my phone. Not just watching a video shared by a friend on Facebook while I’m waiting on line for coffee, but yes, leaving my iPad at home and catching up on “The Mindy Project” on my gigantic phone during a train ride to NYC.
According to The Interactive Advertising Bureau, mobile advertising spending has increased 85% in just two years. With 56% of Facebook active monthly users logging on solely through their mobile devices, long-form video provides a huge upside in revenue. Consumers are accustomed to the ad breaks in long form programming. The “water cooler effect” of must-see television series is already being replicated on Facebook now. And, while many content providers are focusing in on younger demos with digestible short-form original content – entertainment pioneers including Jeffrey Katzenberg’s New TV, Vivendi’s Studio+, and Vice Media – Netflix’s long-form mobile viewership, Facebook’s omnipotence, and the universal use of smart phones are the signs that something big – “but smaller”- will be the norm sooner than experts ever predicted.