Facebook's Watch goes up against YouTube for ad dollars

Facebook Inc launched its Watch video service to U.S. users on Thursday with plans to allow people to submit shows, as the No. 1 social media network vies with Alphabet Inc’s YouTube for advertising revenue.

Advertisers are shifting more of their budgets from television to online as viewers have migrated to watching shows on smartphones and tablets.

On Watch, which Facebook began testing earlier this month, users can see hundreds of shows from the likes of Vox, Buzzfeed, Discovery Communications Inc, A&E Networks, Walt Disney Co’s ABC, as well as live sports like Major League Baseball.

Americans spend more than 73 minutes a day watching digital video, up more than 7 percent from last year, according to eMarketer data. TV watching has dropped 2 percent from last year to 244 minutes a day, a trend that is expected to continue.

Facebook is initially paying some content creators for shows to drive interest. The company is paying $10,000-$35,000 for shorter form shows and up to $250,000 for longer shows, sources told Reuters in May.

The company declined to comment on how much it was spending on shows.

Facebook does not intend to make buying content a core piece of its strategy, Dan Rose, vice president of partnerships at Facebook, told Reuters.

“We are not focused on acquiring exclusive rights,” he said. “The idea is to seed this with good content.”

Facebook plans to eventually open the platform to everyone to submit shows for approval and share 55 percent of ad revenue, Rose said.

The company is testing how ads will work within the shows, he added.

Watch should help Facebook solidify its position alongside YouTube, the leader in the digital video space, for advertisers, said Paul Verna, a senior analyst with eMarketer.

Facebook said Watch is more personal and community-oriented than competitors. For example, it can suggest shows based on a user’s interests and friends can share their thoughts as they watch a video.

For example, fans of the exercise program “CrossFit” can watch and share commentary on live CrossFit events streamed on Facebook while chatting in groups, Rose said.

Similarly, fans of Spanish soccer can watch and chat online about “Hala Madrid,” a show about Real Madrid.
“We think our unique opportunity is around community and engaging with people on topics they love to talk about,” said Rose.