Facebook Embraces Esports in Its Video Strategy Shift

By Sarah E. Needleman and Deepa Seetharaman Features Dow Jones Newswires

Facebook Inc. is paying professional videogame teams and others in the esports industry to post videos on the social network, part of a shift in strategy to deliver more-polished programming to the company's nearly two billion monthly users.

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Earlier this year, Facebook signed contracts with five teams to publish live and on-demand video of players practicing or competing at esports. In addition, Facebook on Thursday is expected to announce a deal with ESL, a global organizer of esports contests, to broadcast matches, player interviews and more.

Under the deals, esports partners must produce a minimum number of hours of video for the social network, and in most cases the partners are allowed to simultaneously publish to rival platforms such as Amazon.com Inc.'s Twitch. Financial terms weren't disclosed.

Facebook's interest in beefing up TV-like programming from science, lifestyle and other genres comes as many publishers are seeing lackluster viewership for their live videos on the platform. Facebook is also grappling with how to censor violent moments and other dark content streamed live to the site.

People scrolling through Facebook's news feed are more likely to watch polished videos with audio turned on, making them potentially lucrative vehicles for ads, analysts say. Such content will increasingly appear in news feeds over off-the-cuff live videos from users, as Facebook wants to be seen as a hub for longform video.

In retooling its video strategy, Facebook revised some of its live-streaming contracts with publishers to emphasize on-demand video, according to people familiar with the matter. Recode earlier reported on Facebook revising its video contracts.

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Facebook also is investing in more gaming and traditional sports content. Esports marries both, and fits Facebook's strategy to focus on lower-profile sports that still have dedicated followings.

The genre has a built-in fan base of millions who watch videos mainly on Twitch and Alphabet Inc.'s YouTube. In 2016, people watched 9.6 billion hours of live-streamed esports and other videogame content on those platforms, according to SuperData Research. The industry tracker projects that number to climb to 11.4 billion hours this year.

Team Dignitas, an esports squad majority owned by the National Basketball Association's Philadelphia 76ers, joined Facebook's paid content program last month after an exclusive contract it had with Twitch ended. Echo Fox, an esports team co-founded nearly two years ago by former basketball star Rick Fox, also recently signed a deal with Facebook, which gave the team advice on how to reach viewers and generate ad revenue.

Amy Carrera, a 40-year-old marketing professional in Kingman, Ariz., tunes in to Twitch because she can easily find her favorite games played live. Facebook might be more attractive to her, she said, if it had a dedicated section for game streams.

Facebook is hoping more esports videos will help it develop such an ecosystem. The company plans to apply what it learns from its initial esports partners to develop new features for game broadcasters, said Leo Olebe, Facebook's director of global games partnerships.

Write to Sarah E. Needleman at sarah.needleman@wsj.com and Deepa Seetharaman at Deepa.Seetharaman@wsj.com

(END) Dow Jones Newswires

May 18, 2017 05:44 ET (09:44 GMT)