Andy Pemberton
Sep 5, 2016

Facebook Live is a nail in the coffin for broadcast TV

Facebook's focus on video has us paying close attention.

Facebook Live is a nail in the coffin for broadcast TV

Right now, the big theme and strategy that we’re executing is that we’re going to become video first." So said Facebook founder Mark Zuckerberg on 27 July this year. A Facebook insider told me this week that the company had agreed to make the case for video for the rest of 2016.

So what’s that sound? It’s the bowels of TV execs the world over turning to ice water. And not just broadcast TV execs. Even Google has blanched at this new threat to YouTube’s online video dominance.

And who can blame it? The last time Facebook pivoted it was to mobile, and it went from nowhere in 2012 to mobile advertising making up 84 percent of all its revenue just three years later. In 2016, Facebook revenues from mobile and digital advertising soared 59 percent year on year.

A lot of that ad money came from the traditional ad business, whose nervous execs now pay very close attention to everything Zuckerberg says.

So what amazing things can we expect from Facebook and video? In the first instance, there’s Facebook Live.

Live broadcast has traditionally been presented as TV’s steadiest bulwark against the internet and, after all, attracting large audiences who all watch a national event at the same time is a great way to sell expensive ad spots.

But, as of last month, TV’s last line of defence against the internet began to crumble. The disturbing video of the shooting by a policeman of Philando Castile in Falcon Heights, Minnesota, which was uploaded to Facebook by his girlfriend Diamond Reynolds, was watched by 5.7 million people on Facebook Live – an audience similar in size to that of CBS News.

The subsequent nationwide protests and the murder of police officers in Dallas were described by The New York Times as "a tragic commentary on modern American race relations". They were also the breakout moment for streaming news on Facebook.

Then, a couple of weeks ago, ABC clocked up an impressive 28 million views of its coverage of the US political conventions, all from its Facebook Live account. And, after Twitter signed up the rights to the NFL’s Thursday Night Football, pundits have been speculating how long it could be before Facebook – now one of the most valuable companies in the world (with a market capitalisation of $348.4bn in July 2016 and more than a billion regular users) – scoops up exclusive rights to the Olympics or the Premier League.

Not wanting to miss out, Time Warner just announced it is buying a 10 percent stake in Hulu, the US TV subscription video-on-demand service. Time Warner knows that wealthy young people – the consumers most advertisers are desperate to reach – are dumping cable TV in the US like it’s going out of fashion (which it is). For example, channels such as MTV and Disney’s ESPN are suffering drops in ratings as great as 23 percent year on year.

Perhaps it’s not a surprise. In the US, cable TV bundles excellent channels such as HBO with not-so-great channels such as, er, all the rest, and customers are forced to buy them all. Back in 1998, the monthly cost of cable in the US was around $27.88. Adjusted for inflation, that cost today should be $39.85 but, instead, it is almost $65, with little innovation to show for the extra cost. As others have pointed out, that means just one thing: the cable business is about to get disrupted.

Luckily, that is not how the business model for TV in the UK is organised. As one ad exec pointed out to me this week: "People have been claiming TV in the UK is dead since Betamax and, yet, here we are."

The average weekly reach of total broadcast to adults aged 65 and older is a whopping 97 percent, according to Ofcom’s PSB Annual Research Report 2016, published in July. But, according to the regulator, the average weekly reach of total broadcast TV among 16- to 24-year-olds is less (82 percent), while the under-25s are watching around 25 percent less broadcast TV than in 2010.

If the trendiest part of your customer base fell by a quarter in six years, you would be worried – especially if they were heading for subscription services such as Netflix that let you watch a TV show without being interrupted every 15 minutes by a very loud and confusing ad, often featuring a glove puppet.

So what can TV do? It would be understandable if TV execs did not rush to put all their programming on Facebook, particularly as many publishers are finding that having Zuckerberg’s thumb on their windpipe is a distinctly uncomfortable experience.

But, as they mull their options, it is worth noting that Zuckerberg has just started testing 15-second ads on Facebook Live. And, according to Advertising Age, "revenue made will reportedly not be shared with media partners during the trial".

Andy Pemberton is the director of Further

Campaign UK

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