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Facebook Cuts Video Streaming Quality in Coronavirus-Hit Europe

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Facebook (FB - Free Report) is temporarily downgrading video streaming quality on its platform and on Instagram in Europe, per a Reuters report. So far, the bandwidth reduction applies only to Europe and not the United States or other markets.

Last week, Netflix (NFLX - Free Report) , YouTube, Disney (DIS - Free Report) and Amazon (AMZN - Free Report) had announced that they will downgrade their video quality to ease the pressure on the Internet and to facilitate work-from-home and online learning during the period of confinement in European countries to combat the spread of coronavirus (COVID-19).

The announcements came after EU industry chief Thierry Breton urged streaming platforms to help reduce their load on the continent’s infrastructure.

On Jan 20, Facebook announced that per its estimates, almost 25 million businesses in the European Union, mostly small businesses, are using its services on a monthly basis.

The tech giant intends to capture the opportunity presented by ever-increasing video viewing on social media platforms. Online video is the most lucrative component of digital advertising. In fourth-quarter 2019, Facebook’s advertising revenues in Europe grew 24.1% year over year.

Internet Traffic Up on Social Distancing

Internet traffic is on the rise as more and more people spend time at home, in line with social-distancing guidelines during the pandemic. Telecom giant Vodafone reported a 50% rise in Internet use in Europe earlier this week, per a BBC report.

Notably, the amount of time people spend streaming spiked by more than 20% worldwide in mid-March, including more than 40% in Austria and Spain, per a Bloomberg report.

Facebook, Inc. Price and Consensus

Facebook, Inc. Price and Consensus

Facebook, Inc. price-consensus-chart | Facebook, Inc. Quote

For streaming services specifically, social distancing and lockdown measures are significantly increasing the number of people using their services at home.

Facebook currently has 394 million monthly users in Europe, up 3.4% year over year. In fourth-quarter 2019, Average Revenue per User (ARPU) growth was strongest in the Asia-Pacific, increasing 20.6% year over year, followed by Europe’s 20.3%.

Netflix, YouTube Lowers Video Quality

Social online platforms like Facebook are joining streaming services in reducing video quality to help European networks deal with demand from people staying at home during the COVID-19 pandemic.

Netflix was among the first streaming providers to reduce the bitrate of its streams for 30 days, in an attempt to lower its network traffic by 25%, per a BBC report.

Like Netflix, YouTube has reduced the quality of its videos in Europe, as an increase in home usage strains the continent’s Internet during the novel coronavirus outbreak, per a Reuters report.

Moreover, the company has also launched a hub in 16 countries dedicated to verified, factual stories about the coronavirus outbreak.

Meanwhile, Disney’s streaming service Disney+ will lower its overall bandwidth utilization by at least 25% in all the European countries launching Disney+ next week, per a Bloomberg report.

Additionally, Amazon is also reducing bitrate speeds in Europe, per The Verge report, followed by Apple which is also reducing streaming quality in Europe for its Apple TV+ platform.

Facebook’s initiatives among other streamers have resulted in lower resolution streams and heavily-compressed content in the region, which is likely to facilitate stay-at-home for users amid coronavirus-led confinement.

Facebook currently 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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