The importance of Live Video for Facebook

Facebook Live, Facebook’s live video streaming tool, launched in August 2015 as a means of allowing celebrities and other prominent users to broadcast video directly to their fans via their Facebook pages. In December 2015, the tool was rolled out in testing to iPhone users in the US, with a complete rollout to iPhone users worldwide in late January of this year.

Last week, the company showcased how essential it views Live as being to the core Facebook experience: it began rolling out an update that replaces the Messenger icon in the Facebook app (on both iOS and Android) with the icon for Live, essentially putting it front and center in the Facebook app user interface (it remains to be seen whether Facebook Live will be spun off as a separate app with a forced download, as Messenger was). The Live icon opens a discovery interface, allowing users to browse current live streams and search for archived videos. Video streams can also discovered in the trending topics section of the search interface.


Twitter’s Periscope app launched more than a year ago in March 2015, about nine months before Facebook launched Live globally. But Twitter’s mobile install base is a fraction of Facebook’s: in its Q4 2015 earnings report, Facebook announced 1.44BN mobile monthly active users, compared to Twitter’s 305MM MAU for the same period (total across mobile and desktop. Twitter doesn’t break out mobile-only MAU). Periscope, as a standalone app, announced 10MM total downloads and 2MM DAU in August 2015, six months ago (although Periscope’s CEO revealed in January that the app’s key metrics had doubled since the August announcement, so Periscope’s current DAU could be around 4MM). The point is: Twitter doesn’t have nearly as massive of an audience to mobilize into a new product as Facebook does, so claims that Facebook is “late” to live video (by virtue of Periscope being more than one year old) assume that first movers always have an advantage.

Not only is Facebook much bigger than Twitter / Periscope (and Snapchat, at 100MM DAU, for that matter), it’s also growing faster on an absolute basis: Facebook added 200MM MAU in Q4 2015, compared to a 2MM MAU loss by Twitter in the same quarter and an estimated 33MM DAU increase* for Snapchat from March 2015 to March 2016, for a (very roughly) estimated current 166MM DAU.

But what’s the significance of Live Video for Facebook? It is probably two-fold. The first major benefit of users streaming their lives on Facebook is that it gives users another (more engaging) format in which to create and share original content. According to a recent report by The Information, the sharing of “original content” on Facebook declined by 21% from mid-year 2015. If Facebook’s “social” purpose is supplanted by a “speakers’ corner” purpose (that is, for people to passively espouse political / social opinion via link-sharing), then users could find other products to fulfill their social needs with and thus leave Facebook.

The second benefit is more obvious: video is invariably the advertising format that will entice large brands onto mobile en masse (and the lack of appropriate inventory is almost certainly the reason why brands haven’t shifted appreciable portions of their substantial digital budgets to mobile already). Facebook generated about 8BN video views per day as of Q3 2015 (which compares unfavorably to Snapchat’s 7BN per day, given the difference in user base sizes), but those views were news feed inventory (that is, easily scrolled past). Given the way Facebook has seen videos perform on Instagram, for which the ad format options have recently been expanded to mimic those available on television, it seems clear that Facebook sees “opt-in” video content as a means of delivering the type of video advertising inventory that brands will pay lots of money for.

*in late August 2014, Snapchat announced 100MM MAUs. Assuming a 1.5 MAU/DAU ratio (about Facebook’s), Snapchat had 67MM DAU in late August 2014. In March 2015, Evan Spiegel announced that the app had 100MM DAUs, for growth of about 33MM DAU in roughly six months. Assuming the same rate of growth — 33MM DAU / six months, or 16.5MM DAU per quarter — then Snapchat would now have 166MM DAU, or 66MM more DAU in March 2016 than in March 2015.