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Facebook Inc Weak Beside Netflix, Inc. (At Least by this Measure)

Facebook Inc, Netflix Inc are still a buy despite market
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Facebook Inc (NASDAQ:FB) has, over the past one year, made aggressive attempts to increase its presence in the world of online videos. But according to one key measure, the social network is yet to make a major dent.

Facebook Inc, Netflix Inc are still a buy despite market

Waterloo, Ontario-based networking firm Sandvine reports on which services use the maximum bandwidth. It just came out with its latest numbers. Facebook’s share of U.S. Internet activity fell to 2.5% from 3% a year ago.

Netflix Zooms Ahead of the Pack

Netflix, Inc. (NASDAQ:NFLX) is by far the biggest consumer of U.S. bandwidth, Sandvine, which based its findings on data collected from over 250 customers in September and October, said. Netflix accounted for 37% of downstream traffic during prime time hours, a notch higher than the 36.5% it reported a year ago. Streaming rivals, Hulu and Amazon, though both tiny by comparison, expanded during the past year. Sandvine says the growth of these services was largely due to the longer, higher quality videos they stream that eat up a lot of bandwidth.

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Facebook Has a Lot of Catching Up to Do

Analysts consider YouTube as a much better comparison to Facebook Inc (NASDAQ:FB) because of the similar nature of their video content. YouTube’s share grew to 17.9% from 14% last year.

There has been a lot of talk about Facebook posing a serious threat to YouTube’s dominance of short online videos, and ultimately ad dollars. Facebook claims that close to 500 million people watch over 8 billion videos a day on its platform. It recently unveiled 360-degree videos on its news feed feature, and is said to be testing a way to share live streams.

But several industry watchers have questioned Facebook’s figures. Unlike YouTube, videos on Facebook begin playing automatically. Also, the firm counts a view after just 3 seconds. That explains why the big increase in the number of people watching videos on Facebook hasn’t translated to higher bandwidth consumption.

eMarketer analyst Paul Verna says the way Facebook counts video views isn’t “necessarily reflective” of the manner in which users watch content. But he went on to add that Facebook’s desire may not be to topple YouTube. It may just be looking for more ad dollars. And marketing execs, he says, are considering Facebook as an important alternative.

“Every time I talk to an ad agency or a marketer, they say, ‘Yes, Facebook is very important, as are several other social platforms,’” Verna told Bloomberg. “None of that diminishes the power of YouTube.”

Shares of Facebook Inc (NASDAQ:FB) closed Monday at $105.61. Netflix, Inc. (NASDAQ:NFLX)’s stock ended yesterday’s trading session at $125.36.

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Abhijit Sen

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