Facebook envisions its new Watch feature as TV designed for social media, a place where users comment, like and interact with show creators, stars and each other — and never leave.
It's a potential threat to Twitter, YouTube, Netflix and other services for watching video, including old-fashioned TV. Yet its success is far from guaranteed.
A screenshot demonstrating Facebook's new Watch feature, which is dedicated to live and recorded video. (AP Photo)
While people watch a lot of videos on Facebook, these are mostly shared by their friends, seen as users scroll down their main news feed.
Getting people to see Facebook as a video service is like Walmart trying to sell high fashion, or McDonald's peddling high-end food, said Joel Espelien, senior analyst with The Diffusion Group, a video research firm.
Sure, it's possible, but something is off.
"It's very difficult to change people's core perception of what your brand is," he said.
Facebook has already had a special video section, but it mainly shows a random concoction of "suggested" videos. The new Watch section replaces this. Some U.S. users got Watch on Thursday; others will get it over time.
The idea behind Watch is to let people find videos and series they like, keep up with them as new episodes appear, and interact with the show's stars, creators and other fans. People's own tastes, as well as those of their friends, will be used to recommend videos.
Daniel Danker, a product director for video at Facebook, said the most successful shows will be the ones that get people interacting with each other.
"Live does that better than almost anything," he said.
Facebook wants to feature a broad range of shows on Watch, including some exclusive to Facebook. Users who already follow certain outlets, say, BuzzFeed, will get recommended shows from those pages.
But Espelien wonders whether Facebook users will tap (or click) the Watch tab when with another tap of the finger they can "click over to Hulu or Netflix or whatever."
Though Facebook might want you to think otherwise, Espelien said there's no boundary keeping you from straying.
Advertising details are still being hashed out, but typically the shows will have five to 15-second ad breaks. Facebook said show creators will decide where the ads go, so they can be inserted during natural breaks.
But it might be a tough sell for advertisers used to a predictable, reliable audience that television has had, Forrester Research analyst Jim Nail said in an email. Facebook's big challenge, he said, will be to train users "to establish a Watch habit."
Facebook and Instagram parent company Meta said Wednesday its first-quarter profit more than doubled, boosted by higher advertising revenue and a 6% increase on the average price of ads on its platforms. But its shares dropped sharply in after-hours trading following lukewarm revenue guidance.
Meta Platforms Inc. earned $12.37 billion, or $4.71 per share, in the January-March period. That's up from $5.71 billion, or $2.20 per share, in the same period a year earlier.
Revenue rose 27% to $36.46 billion from $28.65 billion.
Analysts, on average, were expecting earnings of $4.32 per share on revenue of $36.14 billion, according to a poll by FactSet.
For the current quarter, the Menlo Park, California-based company said it expects revenue between $36.5 billion and $39 billion. Analysts are expecting revenue of $38.25 billion for the second quarter, which is higher than the midpoint of Meta's guidance range.
Meta also said it expects its 2024 capital expenses to be higher than anticipated due to its investments in artificial intelligence. It is forecasting expenses in the range of $35 billion to $40 billion, up from its earlier guidance of $30 billion to $37 billion.
The company has been investing heavily in AI and earlier this month unveiled a new set of artificial intelligence systems that are powering what CEO Mark Zuckerberg calls “the most intelligent AI assistant that you can freely use.”
Meta, along with leading AI developers Google and OpenAI, and startups such as Anthropic, Cohere and France’s Mistral, have been churning out new AI language models and hoping to persuade customers they’ve got the smartest, handiest or most efficient chatbots.
“Meta’s earnings should serve as a stark warning for companies reporting this earnings season," said Thomas Monteiro, senior analyst at Investing.com “Even though the company did beat estimates in all top- and bottom-line metrics, it didn’t matter as much as the reported lowering revenue expectations for Q2. This is the exact opposite of what Tesla did yesterday and goes to show that investors are currently looking at the near future with heavy mistrust.”
On Tuesday, electric vehicle maker Tesla reported that its first-quarter net income plummeted 55%. But it said it would accelerate production of new, more affordable vehicles, and on Wednesday its stock rose 12%.
The number of people using Meta's apps, meanwhile, continued to increase, with 3.24 billion users on average for March in its “family of apps” that includes Facebook, Instagram, WhatsApp and Messenger. That's up 7% year-over-year. Beginning this quarter, the company will no longer disclose user figures for Facebook.
Meta had 69,329 workers as of March 31, a decrease of 10% year-over-year. Zuckerberg called 2023 the “year of efficiency" and the company laid off thousands to reduce expenses.
Meta's shares fell 16% in after-hours trading. Meta's stock price has more than doubled over the past year thanks to a rebound in online advertising.
FILE - A Meta Portal Go is displayed during a preview of the Meta Store in Burlingame, Calif., on May 4, 2022. Meta reports earnings on Wednesday, April 24, 2024. (AP Photo/Eric Risberg, File)
