Facebook (FB - Free Report) , reportedly, will pay and share advertising revenues for content produced by news organizations like Time Warner’s CNN, Fox News and Univision. Per Reuters, the social media giant plans to launch U.S. news programs for its video service, Watch, in 2018.
The original content from these news providers is expected to solve the fake news menace on Facebook’s platform. The company recently announced that it is removing the Trending news section (launched in 2014) of the social network, which users found less useful over time.
Per Forbes, Facebook is testing “Breaking News Label” with 80 publishers across North America, South America, Europe, India and Australia. A “Today In” section that connects people with important news from local publishers is also in the offing. The “News Video in Watch” section will stream live coverage, daily news briefings and weekly deep dives.
Apart from CNN, Fox and Univision, Facebook’s Watch videos will also be supported by contents from the likes of Walt Disney’s (DIS - Free Report) ABC News, Advance Publications' Alabama Media Group, and websites ATTN: and Mic.
We believe that these will eventually boost user engagement and attract advertising dollars. Moreover, expanding Watch video content will give Facebook an edge over the likes of Alphabet’s (GOOGL - Free Report) YouTube, Snap (SNAP - Free Report) and Twitter (TWTR - Free Report) .
Watch’s Expanding Content: Key Catalyst
Facebook focuses on tapping the lucrative video-streaming market to attract advertisers. The company launched Watch in August 2017, exclusively dedicated to video viewing.
Early this year, Facebook rolled out a new feature called “Watch Party” that enables group members to watch videos together and interact among themselves, thereby improving user engagement.
Notably, Facebook plans to invest $1 billion in original content in 2018. The company has hired executives to expand its roster of original content.
Facebook has also signed a deal with Major League Baseball (MLB) to stream 25 games on Watch, this season. Not just this, prestigious award ceremonies like The Oscars: All Access and a red carpet pre-show of Golden Globes were also streamed on the platform.
We believe by bringing more video content, Facebook is trying to bring in more ad dollars, which remain the mainstay of the company’s revenues with over 98% contribution in the last fiscal year.
Facebook carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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