Facebook Needs a Major Video Site Hook-Up

Last Updated Aug 17, 2010 4:30 PM EDT

Want to know the future of Facebook? It's video. According to comScore, Facebook was the third most popular U.S. site for watching video. But while tearful and joyous military reunions with their families, amusing cats, and pole dancing mishaps might bring eyeballs, they don't necessarily bring that much money. That's why Facebook needs a good video partners -- or maybe an acquisition -- to get smarter about how it delivers entertainment and makes more money at the same time.

I don't completely trust comScore's numbers. Then again, I'm wary of most Internet traffic measures that depend on pre-selected panels and non-random sampling. However, this is what we've got, and you make business and management decisions based on existing information and a salt shaker. And the results were interesting, as Facebook was near the top of the heap, at least if you define heap as everyone other than Google (GOOG), which seems to get three times the traffic of its closest competitors. Here is a comScore table showing video views (click on tables to enlarge them):

Just behind Google and Yahoo (YHOO), Facebook came in ahead of Microsoft (MSFT), Fox (NWS), Turner (TBS), Viacom (VIA), Disney (DIS), and Hulu. Notice how far Facebook is ahead of the traditional television and movie studio companies: anywhere from 22 percent to almost 64 percent. In video views, Facebook -- which only seems to offer them as an afterthought -- crushes the traditional industry powerhouses.

In fact, I wonder whether a mechanism of video delivery might hide Facebook's true popularity. Watch many videos from Facebook and you'll notice that people often post a YouTube link. Yup, a lot of the material comes from Google. I suspect that either Google ends up getting the credit when Facebook is the preferred viewing site, or there is some double counting.

Regardless, people watch a lot of video on Facebook. It's one of the reasons I thought that the company disagreed with Google and Verizon (VZ) on net neutrality. But for all the importance to users, it would seem that Facebook miss important revenue opportunities.

Notice how Facebook doesn't come up in the top ten sites for delivering video ads. As comScore explains in the graph legend, there are other money making mechanisms for video, but video ads is an important one.

Facebook's other problem goes back to how many YouTube videos it has as posts. People generally don't think of uploading video to the site. What Facebook needs is a way to fix both problems at the same time. That would be a strong partnership or even an acquisition. Maybe it's buying or working with one of the video ad networks listed or, perhaps, a hosting site like Hulu. Maybe a combination of the two.

The advantages? Facebook could afford to give the bulk of the ad revenue to the partners that own content. Even a slice of the revenue stream would prove a big boost and help create an atmosphere in which the major video producers would rather work with a Mark Zuckerberg than a Google's Eric Schmidt, Apple's (AAPL) Steve Jobs, or Microsoft's Steve Ballmer, putting Facebook into a stronger competitive position. As Wired recently noted, consumers continue to move from a Web-centric experience of the Internet to one dominated by easy-to-navigate apps that deliver what people want. Facebook has a chance to steal a lot of thunder and lightning from some major mobile deliverers.


Remote control image: RGBStock.com user mzacha, site standard license. Image editing: Erik Sherman.
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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.