It's been four months since Facebook launched IGTV, with the goal of creating a destination for longer Instagram videos. Will it be a high-profile flop, or could it be the company's next multi-billion dollar business?
IGTV, which offers videos up to 60 minutes against Instagram normal 60-second limit, has no It has been a lot of fun. Since there is no advertising yet, it has not made a dollar either. But it offers Facebook the power to dominate a new category of premium video and develop a subscription business that performs better with high-quality content.
Facebook collaborated with numerous media brands and celebrities to produce high quality, vertical videos for IGTV on June 20 both as a dedicated app and a department within the main Instagram app. But IGTV has been quiet ever since. I have heard repeatedly in discussions with media executives that almost nobody creates content specifically for IGTV and that the audience on IGTV remains small compared to the distribution of videos on Snapchat or Facebook. Most videos are used by the Snapchat account of a brand or influencer (best) or the YouTube channel (more often). Diggay heard the same feedback .
Facebook's goal should be to make IGTV a stand-alone large property that is different from Instagram. To do this, the company should follow the concept of the "IGTV" name and rethink which TV shows look like an Instagram user.
His team was to use the Playbook of top TV streaming services, such as Netflix and Hulu, to develop original series with top talent in Hollywood to anchor their own subscription service, but in a new format of Specially designed for the vertically-oriented, distraction-filled screen of a smartphone
Mobile video is premiered  Of the 6+ hours per day Americans spend on digital media, the majority is involved in this topic Your phone (most of it on social and entertainment activities) and video viewing has grown with it. In addition to the decline in linear television and the advent of over-the-top streaming services such as Netflix and Hulu, we have developed a whole new category of video: mobile native video.
Starting with the most basic iteration of everyday user captures for Snapchat Stories, Instagram Stories and YouTube Vlogs, Mobile Video is a completely different viewing environment with much more competing for attention. Mobile video is watched as people spend their day. While you can block a few minutes at a time, you can not block hours at a time, and you'll see annoying text messages and push notifications on the screen as you watch them.
"Stories" on Top Social Apps Are Vertical (19659009) Speaking recently with Jesús Chavez, CEO of mobile-focused production company Vertical Networks in Los Angeles, he emphasized that successful video episodes on mobile devices are not just normal TV clips are with changes to the "packaging" (cropped for vertical, thumbnails selected to get clicks, etc.). The way episodes are written and recorded must be completely different in order to be successful. Chavez expressed it in terms of the higher "density" of mobile video: packing more activity into a short window of opportunity, with faster dialogs, fewer setup shots, split screens and other tactics.
With Growing The amount of time people spend every day watching videos in their social apps – and the flood of sub-grade videos looking for the number of views – makes it worthwhile for them to make a premium Content option. We've seen this scenario before, when the ad-dependent radio produced subscription satellite radios like SiriusXM and produced the commercial network TV pay-TV channels like HBO. As it stands in this context, a trusted service with the same high bar for compelling storytelling of popular movies and TV series – and often with famous talents – but of course in the vertical smartphone environment.
If IGTV pursues this route, it would most directly compete with Quibi the new company that will spend $ 2 billion on Jeffrey Katzenberg and Meg Whitman (and until their announcement Newity temporarily called NewTV) founding summit last Wednesday). They are developing a large library of exclusive shows by famous directors such as Guillermo del Toro and Jason Blum, designed specifically for smartphones with their upcoming subscription-based app.
Quibis financing comes from the world's largest studios (Disney, Fox B. Sony, Lionsgate, MGM, NBCU, Viacom, Alibaba, etc.), whose executives are sufficient in such a platform on which they could produce content See opportunity to write nine-digit checks.
TechCrunchs Josh Constrine argued last year Snapchat should go in a similar "HBO of Mobile" direction, albeit ad-supported rather than a subscription model. The company actually seems to go in that direction with the announcement of Snapchat Originals last week even though it announced and then canceled original content plans prior to .
Snapchat announced Snap Originals last week
Facebook is best positioned to win
Facebook is best positioned to take this opportunity, and IGTV is the vehicle for that. Without considering the integrations with the Facebook, Messenger or WhatsApp apps, Facebook starts with a base of over 1 billion monthly active Instagram users. This is a huge audience to publish these original shows, and an audience that does not need to create a separate account or sign up to find out what's going on on IGTV. A wider distribution is also a selling point for creative talent: they want their shows to be seen by a large audience.
The user data that Facebook competes for only in targeted advertising from Google would give IGTV's recommendation algorithms a distinct advantage. Pushing users to the IGTV shows that their interests are most relevant and most popular with their friends.
The social nature of Instagram is an asset to awareness and engagement around IGTV shows: Instagram users could see someone following them or "like" a show (pending their privacy settings). An obvious feature would be to allow users to discuss or rate a show by sharing it with a comment on their main Instagram feed. their followers would see a clip or trailer, which would then click through with a tap on the entire IGTV show.
The development and acquisition of a library of high-quality original productions is massively capital-intensive – just ask Netflix about the $ 13 billion that will be spent this year. The focus on premium quality mobile video will not be any different. Therefore, Katzenberg and Whitman raise a $ 2 billion war chest for Quibi and plan to produce $ 100,000-150,000 per minute on par with top TV shows . Facebook has 42 billion dollars in cash and equivalents in its balance sheet. It can easily overtake Quibi and Snap in financing and marketing original shows through a mix of newcomers and Hollywood icons.
Snap can not afford (financially) to compete head-on and does not have the same magnitude distribution. It is at 188 million daily active users and is not growing fast anymore (8% last year, but DAUs have shrunk by 3 million in the last quarter). Snapchat is also a much more private interface: it does not allow users to see other people's activities, such as Facebook, Instagram, LinkedIn, YouTube, Spotify, and others, to encourage discovery of content. Snap is more likely to create a hub for ad-supported Mobile First shows for teens and Twenty Twens rather than rivals like Quibi or IGTV to create a broader Netflix or Hulu of mobile native shows.
It's time to go freemium
Especially when a company launches a subscription level, investing substantial capital is particularly important: from the start, users need to see enough compelling content behind the paywall and regularly add new content to it to find an ongoing subscription.
There is currently no monetization of IGTV. It's in experimental mode, while Facebook watches people use it. If a company can earn enough advertising revenue from just short commercials to continue to benefit from high-quality, episodic mobile shows, it's Facebook. But a freemium subscription model makes more sense for IGTV. From a financial point of view, building IGTV into its own profitable profit and loss accounts for large-volume content investments probably requires more revenue than generating ad revenue alone.
Just as important is the approximation of incentives. Subscriptions are defined by " time spent well " rather time spent and clicks made: quality over quantity. This is the environment where premium content of other formats is also successful. SiriusXM as a breakout on the radio, HBO in linear TV, Netflix in OTT originals. The type of content that IGTV will encourage and the creative talent it attracts will be much higher if the incentives are to create must-see shows that attract new subscribers than if the incentives existed Create videos that optimize for views. 19659050] Could there be a "Netflix for Mobile Native Video" with shows that were shot in portrait format especially for viewing on a smartphone?
The optimization for views (to increase advertising revenue) was the model that media companies used to create content for Facebook for the last decade. The toxicity of this fact was a top news last year as Facebook recognizes many of the problems with Clickbait and sensationalism and announces changes.
Over the years, Facebook has pushed up media companies with changes to its newsfeed algorithm, forcing them to drastically change their content strategies (often with layoffs and restructurings). It has burned bridges to media companies; In particular, after last January the question of how to reduce dependence on Facebook platforms has become a common point of discussion among digital content executives. If Facebook wants to get top producers, directors and production companies to invest time and resources in developing a new format of high-quality video series for IGTV, it needs an incentive-based business model that they can trust.
Imagine a free, ad-supported level for videos of influencers and media partners (plus "IGTV Originals") to draw Instagram users, then a 3-8 / month subscription level for access to all IGTV originals and one ad – free viewing experience (In comparison, Quibi plans to charge a subscription for $ 5 / month with ads with the option of $ 8 / month for its ad-free tier.)
Watching Netflix Grow Traditionally TV streaming, a subscription-based business, should be a welcome addition to Facebook's portfolio of leading content-sharing platforms. This would not be the first expansion beyond advertising revenues: Facebook's newest main department, Oculus, generates revenue from hardware sales and a 30% revenue reduction for VR apps in the Oculus App Store (similar to Apple's cutback of the iOS app sales). Facebook is also testing a dating app that works well – based on the freemium business model Tinder, Bumble, Hinge, and other leading dating apps – of course, adding a subscription level.
Facebook is about to have more public scrutiny (and state regulation) over privacy and its ad targeting than ever before. The inclusion of subscriptions and transaction fees as sources of revenue will benefit the company financially, ensuring a healthier match of incentives with users and facilitating public criticism of how Facebook uses people's data. Facebook is already testing subscriptions to Facebook groups and has even looked into offering subscriptions for advertising on its core social platforms. The latter is unlikely, but the development of revenue streams beyond advertising is clearly a concern that management is considering.
The Way Forward
IGTV must make product changes if it goes in that direction. At the moment videos can not be connected to a series (ie a show with several episodes) and the findability is very weak. Not only will you be able to see the latest videos of the videos you are tracking, trend trends, and a variety of recommendations, you will only be able to search for channels to follow (based on the name). There is no way to search for specific videos or shows, not to search channels or videos for topics, and no way to see who you are watching.
It would be a missed opportunity not to fight for it. The upside is huge – owning the Netflix of a new content class while the base is quite low for a company with such a big record.