It’s late to the party, but it might still outsmart the competition
When it comes to producing original video content, Netflix and Amazon were out of the traps first and are raced far ahead of the competition. Netflix recently announced that it was committed to spending a boggling $7 billion on producing original content next year, while Amazon spends around $4.5 billion a year.
Facebook has now decided to throw its hat into the ring. It is believed that it is gearing up to spend about $1 billion in original content until the end of 2018. For the moment, Facebook isn’t gunning to take down Netflix or Amazon. It has instead trained its sights on an easier target – Apple. Incidentally, Apple has said earlier that it too will commit $1 billion to producing original content.
Facebook’s content will be streamed on its Watch channel that is currently available to all customers in the US and streams original content from Facebook’s partners including Discovery Channel, Freethink Media and MLB. Facebook will gradually roll out Watch to its international markets as well.
Facebook is prepared to cough up around $3 million per episode on flagship content with sitcom budgets also hovering around the six-figure mark. But Facebook’s content generation model is starkly different from Netflix and Amazon. While the latter two pump tranches of cash on original content production, Facebook’s endgame is to strike a deal where it won’t spend on content production, but instead pay the creators a percentage of the ad revenue generated via streaming the content on its Watch platform.
Last year, Facebook began spending on content on its Live platform – reportedly up to $35,000 on five- to ten-minute episodes that companies like BuzzFeed and Vox Media owned, whereas Facebook earned a 45 per cent of the ad revenue generated from it.
One of the biggest areas where Facebook’s is believed to be spending big is to live-stream sports. Recently, Facebook bid $600 million for the five-year rights to steam the Indian Premier League cricket matches, only to be outdone by Star India who pledged $2.55 billion.
Detractors of Facebook’s roadmap for producing original content say that it would be wiser for Facebook to focus on virtual reality media and entertainment. By this time next year though, we’ll know whether Mark Zuckerberg’s $1 billion gamble paid off.