Facebook Inc. Takes 2 More Steps Toward Becoming YouTube

By Markets Fool.com

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Users watch 3 billion videos per day on Facebook. Source: Facebook.

It's no secret that Facebook is pushing more users to upload video content directly to its site. So far, it's had some good success placing autoplay videos in users' News Feeds. Since introducing the feature in 2013, the company saw video plays balloon to 1 billion per day in June and 3 billion per day in the fourth quarter.

Now, Facebook has developed two new ways to keep those numbers climbing. First, it rolled out new embeddable videos at its F8 developers conference. Second, it's testing a continuous autoplay feature to keep video viewers watching video after video, according to Re/Code. Both of these features are key aspects of Google's YouTube, which generated $4 billion in revenue last year.

Facebook seems to have its sights set on displacing YouTube as the place to upload short-form video.

Improving the utility of Facebook video
While it was possible to embed Facebook videos on websites, it was never pretty. Users would have to include the entire Facebook post. With the new embed module, users can create a nice minimalist player that keeps all of the extraneous information out. In fact, the look is very similar to YouTube's embedded video player.

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The move may give more users incentive to upload videos directly to Facebook instead of to YouTube (or both) for use on websites. Facebook carries the added bonus of easily enabling users to send a video out to followers. Recent surveys show that Facebook's News Feed algorithm favors native video uploads over YouTube embeds, meaning users will reach a wider audience if they upload videos directly to Facebook.

For Facebook, embedded videos represent an opportunity for monetization. In the News Feed, Facebook autoplays videos, which makes pre-roll video advertisements significantly less effective. If a video is embedded in another website, the context of the website increases the likelihood that a user will click on a video and wait through an advertisement to see its content. YouTube already enables pre-roll ads on embedded video.

Increasing video views with more autoplay
The autoplay feature of Facebook's videos is undoubtedly increasing Facebook's video view count. Facebook counts a video view as 3 seconds of continuous playback, which could be someone reading the post above a video post. Still, no matter how Facebook counts a video view, there's still merit to its autoplay feature.

By autoplaying videos, Facebook is able to make the decision for users whether they want to hit the play button on a video. That makes it more likely a user will sit and watch the video, instead of reading the post and deciding to move on. With continuous autoplay, Facebook may be aiming to amplify this effect.

YouTube started rolling out a similar autoplay feature in February, which automatically plays related videos. The feature provides more of a sit-back-and-watch environment instead of an active video discovery. It's similar to its music service, which provides auto-generated playlists.

The passive aspect of continuous video views is another opportunity for monetization. Once a user gets on a roll of watching quality videos on Facebook, that user is more likely to sit through interstitial video ads, like on YouTube.

Becoming YouTube
Facebook has reportedly been courting big-name YouTube stars to come to its platform, and more recently it's been in talks with broader content producers such as Vox, Vice, and The Onion, according to The Information. For Facebook's continuous autoplay video feature to be effective, Facebook needs to build a large database of high-quality videos.

Finding an effective way to monetize videos and share ad revenue is key to attracting more content producers through organic means rather than upfront financial incentives. These recent steps by Facebook are a clear indication that the company sees itself becoming a larger part of the online video market, and it could lead to significant growth in video views and the ad revenue that comes along with them.

The article Facebook Inc. Takes 2 More Steps Toward Becoming YouTube originally appeared on Fool.com.

Adam Levy has no position in any stocks mentioned. The Motley Fool recommends Facebook, Google (A shares), and Google (C shares). The Motley Fool owns shares of Facebook, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.