Facebook Watch Doesn't Need to Be a YouTube Replacement
Facebook (NASDAQ: FB) launched its new video platform, Watch, over the summer, and it's invested heavily in the product. Not only is it paying video creators upfront for content, it's run television commercials during big live events like Monday Night Football. Facebook is currently seeding the platform with content; it plans to transition to a revenue-share model only, where the platform generates enough revenue through incentivizing creators to post videos of their own accord.
An analysis of Watch from Morgan Stanley's Brian Nowak shows the average North American user only needs to spend seven minutes per day viewing videos on Watch for Facebook to break even on its upfront investments. If Facebook expands Watch to Europe, that number falls to three minutes per day. That's far less than the average hour per day that users of YouTube, the Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) subsidiary, watch on mobile. (Nowak expects North American users to spend an average of 20 minutes per day viewing videos on Watch next year.)
Even if Facebook only captures 10% of the engagement of YouTube, it'll still be operating at breakeven on its content investments.
Source: Fool.com
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