Facebook Inc (NASDAQ:FB) is a social giant, but it has ambitions far beyond that. The firm is now in talks to produce its own original TV content. That’s according to a Wall Street Journal report on Monday morning. The report says that the Menlo Park, California firm is moving quickly in the area. It aims to launch original scripted programming by the end of the Summer.
That’s a big change in the way Facebook has handled video. The firm already has a Youtube style platform, but it has met with limited success and its share of controversy. Last week the undertaking revealed that it would release a creator-focused mobile app for video later this year. Original programming, however, is a very different world.
Facebook spends big on original TV push
As many other firms have found out, TV is expensive. Facebook doesn’t appear to have a problem with spending cash in order to break into the market, however. According to people familiar with the plans, cited by the WSJ, Mark Zuckerberg’s firm is willing to spend up to $3 million per episode.
That puts the Menlo Park production house up there with other makers of high-quality TV. Episodes of Game of Thrones cost HBO about $6 million to make, while Breaking Bad cost AMC about $3 million per episode.
The firm has two original shows on its slate already. Strangers, a relationship drama, and Last State Standing, a game show, are set to be the first new shows from the social networking firm. The shows will target the 13-34 age bracket according to the Wall Street Journal report.
One of the most interesting details in the report revolves around how Facebook can be uniquely useful to Hollywood. The report says that the firm may be willing to share some of its data with production studios. That win-win deal may be enough to make its platform more attractive than those of competitors.
Facebook may already be ahead
The biggest advantage Facebook Inc (NASDAQ:FB) holds over any competitor is its massive user base. Last week CEO Mark Zuckerberg revealed that it is coming very close to 2 billion users. As with Amazon.com, Inc. and Apple Inc. (NASDAQ:AAPL) the firm hopes to turn that advantage into a big new business.
The firm has, like Netflix Inc, amassed data on what users want to see. It also has the perfect platform to launch its content, a banner ad on Facebook is one of the hottest ad spaces in the world. On top of that its video playback technology is just as good as anything else out there.
The firm’s willingness to share data with producers may, however, be key to its pitch. Jealous of Netflix, Inc. many TV makers are looking for ways to collect more data. If Facebook offers them a way to do that easily, it may be more valuable than higher prices offered by the competition.
At the same time, however, Facebook has had big problems with advertiser data-sharing. Those issues may make production houses more circumspect about dealing with the Menlo Park company.
The Menlo Park tech company is in very strong position to make video work for it. The launch may even be enough to help with some of the pressures shares have faced in recent months.
Facebook Inc lines up against Apple, Netflix
Netflix Inc (NASDAQ:NFLX) is the TV tech giant, but its success has brought huge competition. The latest moves from Facebook Inc may signal a big change in online video platforms. As competition heats up, scripts, actors and technical staff are likely to get more expensive. That may be a big problem for some of the other tech hopefuls looking to enter the world of original TV.
Apple Inc. (NASDAQ:AAPL) has met with a pretty subdued reaction in its own original content push. The firm’s Planet of the Apps met with poor reviews on release, while the rest of its TV business appears to be in disarray.
Other tech companies have also had success in the area. Alphabet Inc (NASDAQ:GOOG) offers original content through its Youtube platform, and Amazon.com, Inc. (NASDAQ:AMZN) has been selling original content for years on its Prime service. It’s not exactly clear where the Facebook move would fit in to this evolving space.
This competition is already fierce, and with the entry of more major tech players, it’s likely to become even more torrid, TV networks, who already feel hard done by when it comes to Netflix, may be feeling even less confident as competition heats up for original shows.
Apple Inc. may be the firm to watch as the Facebook story unfolds. Its original forays into the world of TV were met with great optimism on Wall Street. It wasn’t until the firm had to put a plan into action that the reality of the business set in. While the firm’s efforts are by no means dead in the water, they do seem stagnant. Facebook would be well to keep an eye on Cupertino as it tailors its own strategy.
Facebook Inc (NASDAQ:FB) is an ad business, and movement in its stock revolves around what money it can make in that space. So far the returns from its video platform have not been ideal. Recent information from ad agencies shows that the company has been below average in how many people actually watch its ads.
As a result, media agency executives are concerned about the future usefulness of the platform. The push into original content, which may have higher engagement, may help to alleviate these concerns.
Facebook stock hasn’t really suffered as a result of its business failures. The firm’s earnings are still strong, and those holding the shares have made huge gains over the last few months. Since the first of January Facebook shares have gained almost 35 percent. For a business with a $450 billion market cap that is incredible growth.
People only have so much time per day to watch video content, and Hollywood only has so many scripts to go around. As original content becomes a major battlefield for tech companies, both of these factors are a concern.
Facebook is going to be facing off with Apple Inc. (NASDAQ:AAPL) to gain a major place in the video market. The firm’s bold opening strategy, revealed in this morning’s WSJ report, contrasts well with Apple’s lackluster follow-through on its potential. There are many stumbling blocks ahead for Facebook, and shareholders should be watching for meaningful progress in the video space in the months ahead.