For the many digital publishers who have been shifting their focus to video content, Facebook's new "Watch" video platform is a sight for sore eyes.
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Many of those media companies poured resources into online video in the hopes that big advertising budgets will follow, but it has been harder to realize those ambitions without the second of the two big tech giants fully in the marketplace.
Now Facebook, with its 2 billion users, is open for business, joining rival YouTube. And it is taking the risk out of the content-creation endeavor for many publishers, either by paying to offset their production costs or offering to license or buy their content outright, people familiar with the arrangements say.
The initial crop of programming that will be available in the "Watch" tab on Facebook includes a dog DNA testing show from Mashable, a show about cheese from Business Insider and an exploration of how the world might end from NowThis News. Group Nine Media, the parent of NowThis News, The Dodo and Thrillist, said it is launching a whopping 24 shows across its various brands.
Facebook also is offering some publishers a share of revenue generated from video ads it plans to place in their content. In some cases, publishers are being guaranteed a certain amount of ad revenue. Facebook has said it hopes to move to an advertising revenue share model exclusively down the road.
"We are funding and creating shows to seed the ecosystem and learn more about how episodic, community-driven, and built-for-mobile shows might work on Facebook," a company spokeswoman said in an emailed statement. "At launch, the content we've funded will be a small percentage of the shows available in Watch -- and over time, this percentage will become even smaller, as more and more publishers share their shows on Facebook."
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Ad buyers say they are encouraged by Watch's potential as an ad platform. Part of the attraction, they say, is the opportunity to advertise in a dedicated video tab as opposed to a cluttered Facebook news feed where some marketers feel people aren't paying close attention to videos as they scroll through.
Video budgets for Watch will start off small while it ramps up its content offerings and audience. "We foresee increasing spend on the platform provided Facebook can demonstrate consumer interest," said Bryan Wiener, executive chairman of digital media agency 360i. "There is a lot of money over time that will move from linear TV to digital video and Facebook Watch should benefit from that."
YouTube still dominates an online video market that eMarketer estimates at roughly $13 billion in 2017.
"This may take some budget from YouTube, but the platform needs to scale initially," said Mr. Wiener.
Another ad buyer from a large media agency group said the combination of high-quality content with Facebook's data could prove a powerful concoction for advertisers. But there are some potential pitfalls for Facebook, if it can't deliver the big audiences marketers envision or if users are able to easily skip through ads.
Facebook is largely leaving it up to publishers to decide what type of content they would like to produce. In some cases publishers are pitching show ideas to Facebook complete with estimates of episode length and production costs, and Facebook is choosing which individual shows it is willing to help finance, according to people familiar with publishers' discussions.
For many publishers, creating content for Watch isn't a significant departure from the way they already create video content for Facebook's news feed or for other video platforms such as YouTube.
Group Nine Media's shows will range in length from around four minutes to around 15 minutes each, the company said.
"We would be producing this type of content whether or not Facebook created a platform for it," said Ben Lerer, chief executive at Group Nine Media. "The fact that Watch is here validates that approach."
The company chose to create 24 shows rather than just a handful in order to quickly to learn what resonates with Watch viewers, Mr. Lerer said.
Business Insider said it is launching four new shows specifically for Watch, including "The Great Cheese Hunt" and "Science The Sh*t Out Of It, " with episodes of around five minutes in length.
To date, the company has specialized in 60- to 90-second videos, so stretching to five minutes has proved a "creative challenge," but it hasn't required a significant shift in resources, according to Nicholas Carlson, editor in chief of Business Insider's "Insider" brand.
Other digital publishers are being a little more ambitious with their Watch efforts. Fashion and lifestyle-focused publisher Refinery29, for example, said it is working on five shows, some scripted and some nonscripted, ranging in length from two minutes all the way up to 20-minutes per episode.
That is a departure from the shorter videos it has typically published to Facebook and other platforms over the past few years.
"It's interesting to see Facebook now committing to the next stage of video," said Refinery29 co-CEO Philippe Von Borries.
Facebook has also sought content from more "traditional" video-content providers, seeking scripted programming from Hollywood studios and agencies.
In meetings with major talent agencies including Creative Artists Agency, United Talent Agency, William Morris Endeavor and ICM Partners, Facebook has indicated it is willing to commit to production budgets as high as $3 million per episode, people familiar with the situation have said.
Write to Jack Marshall at Jack.Marshall@wsj.com and Alexandra Bruell at email@example.com
(END) Dow Jones Newswires
August 11, 2017 06:14 ET (10:14 GMT)