Facebook Watch steps up competition with YouTube for ad dollars

Social Media Reuters

(AP Photos/Noah Berger)

Facebook Inc launched its Watch video service to all users on Thursday with plans to allow anyone to submit shows, as the No. 1 social media network takes on Alphabet Inc's rival YouTube to boost advertising revenue.

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The move comes as advertisers are increasingly shifting budgets from television to online as more viewers prefer to watch their favorite shows on their smartphones and tablets.

On Watch, which Facebook began testing earlier this month, more than 2 billion users can see hundreds of shows from the likes of Vox, Buzzfeed, Discovery Communications, Walt Disney & Co's ABC as well as live sports like Major League Baseball.

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Americans are spending over 73 minutes per day watching digital video, up more than 7 percent from last year, according to eMarketer data. TV watching has dropped 2 percent from last year to 244 minutes a day, a trend that is expected to continue.

Facebook is initially paying content creators for shows to drive interest. The company is paying $10,000-$35,000 for shorter form shows and up to $250,000 for longer form scripted shows, sources told Reuters in May.

The company declined to comment on how much it is spending on shows.

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Facebook plans to eventually open the platform to everyone to submit shows for approval and share 55 percent of ad revenue, said Dan Rose, vice president of partnerships at Facebook, in an interview.

Facebook is testing how ads will work within the shows, he added.

Over the past few years, Facebook has been gaining on YouTube, the leader in the digital video space, in terms of winning over advertisers, and Watch should help solidify its position, said Paul Verna, a senior analyst with eMarketer.

Facebook said Watch is more personal and community-oriented than competitors. For example, it can suggest shows based on a user's interests and friends can share their thoughts as they watch a video, or participate in groups dedicated to a show.

"We think our unique opportunity is around community and engaging with people on topics they love to talk about," said Rose.

For example, fans of the exercise program "CrossFit" can watch and share commentary on live CrossFit events streamed on Facebook while chatting in groups, Rose said.

(Reporting by Jessica Toonkel; Editing by Anna Driver and Richard Chang)

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