Facebook: video to be big business driver

Video will be a much bigger driver of Facebook’s business in the next few years than Facebook Messenger, according to CEO Mark Zuckerberg.

Speaking on the company’s second quarter earnings call, Zuckerberg said that Messenger and WhatsApp are a huge opportunity and are services it will invest a lot in over a three-to-five year period.

However, he singled out video as having the possibility to reach large scale and shift the economics of the “current feed-based businesses” with mid-roll ads, revenue shares and a different margin structure.

“One of the big questions that we’re focused on as we build this out,” said Zuckerberg, referring to the social network’s content plans.

“We’re very committed to building it out because it’s what people in the community want, but one of the big things that we’re really very focused on is making sure that we get this right.”

In May, Reuters reported that Facebook had signed deals with youth-focused media companies like BuzzFeed, Vox Media, Group Nine Media for a forthcoming video service made up of long- and short-form content interspersed with ads.

Facebook has also started talks with TV studios and video producers about licensing shows, in a bid to bolster its video efforts, and is set to reboot MTV comedy  Loosely Exactly Nicole.

Meanwhile, the social network hired CollegeHumor co-founder Ricky Van Veen last summer as head of global creative strategy.

Zuckerberg said he wanted to do an “accurate and a full job of conveying what we’re actually thinking about as a business,” after noting that a lot of the questions on the call had focused on Facebook Messenger.

He said he was “optimistic” about video and claimed it will a “much bigger driver of the business over the next two to three years”.

Asked about Facebook’s augmented and mixed reality plans, Zuckerberg said: “Video is going to be the primary driver or one of the big drivers over the next few years and Messenger maybe after that. I think AR is quite far down the road.”

“But when you’re running an operation and serving people at this scale, I think you have a responsibility to invest in all these thingsthat are downstream that could help shape and improve people’s lives, because I don’t think that there are that many other folks in the world who will.”

Also speaking on the call, Facebook’s chief financial officer, David Wehner, said that the company expects video content investments to “contribute to operating expense growth in the second half of 2017”.

He said Facebook now expects it full year 2017 total GAAP expense growth to be approximately 40% to 45%, narrowed from its previous range of 40% to 50%.

Overall in Q2 Facebook reported a 45% year-on-year increase in total revenue to US$9.32 billion. Net income climbed 71% to US$3.89 billion.