Facebook ends YouTube’s unrivaled dominance of online video

You can find a German version of this article here.

Not everyone has realized it yet, but a fight about one of the most important sectors of the digital industry is getting increasingly intense and dramatic. I am talking about video platforms. For ten years, the name YouTube has been synonymous with user generated videos as well as with video on the web in general. But while the Google-owned site just celebrated its 10th anniversary, another player is questioning the dominant position of YouTube, attacking the pioneer with full force: Facebook.

Only two years ago Facebook did not have a lot to do with video. Users have certainly been able to upload clips to the site for a very long time. But this never was a crucial element of the social network. And definitely not a strategically important feature. Until 2013. Around that time, Facebook CEO Mark Zuckerberg and the management team must have made the decision to make video one of the core parts of the Facebook experience and monetization machine. The incentives for such a move are obvious: Videos are a very suitable media type for ad placements. Furthermore they make users stick around and spend more time with Facebook instead of other sites or apps.  

At the end of 2013, Facebook had implemented a critical change that subsequently made the number of video views explode: It switched all newsfeed videos to autoplay. Users did not need to click or tap anymore on a video to watch it. That certainly increased the annoyance factor for users, but it also offered an intriguing way for video creators to get the clips in front of as many eyes as possible. Suddenly there was a clear incentive for video creators to upload their clips directly to Facebook instead of sharing a video hosted on YouTube, which would require users to click on it to start it. The difference between a clip hosted on YouTube and on Facebook can be huge, as this example illustrates.

The introduction of autoplaying videos was just one of many measures to increase the impact and usage of video content at Facebook. The company also optimized the newsfeed algorithm for video relevancy and changed the way video content is presented on Facebook pages, reminiscent of YouTube. A couple of other successful features from YouTube were copied as well. In March an embedded video player was launched that lets people put Facebook videos on other websites and blogs. Just last week a new programme was started to bring publishers, digital video producers and advertisers together to create video ads that would run on Facebook. One goal of this move is to tie the key players involved in the value chain of online video closer to the social network.

And the effort is paying off: During the recent presentation of the quarterly results, Facebook COO Sheryl Sandberg pointed out video ads as one specific area of growth. It was also announced that Facebook now generated 4 billion video views per day. In September last year, this number was only at 1 billion. YouTube reached the 4 billion daily views mark in the beginning of 2012. It took the service more than 2 years to get from 1 billion to 4 billion. Facebook managed to pull this off within 7 months. Even if the autoplay character means that the number is a bit inflated compared to YouTube, it still is an astonishing development.

There are still some pieces missing for Facebook in order to get a shot at really crushing YouTube. Obviously Facebook lacks a specific destination site/app which lets users find and search for all available video content. In regards to content, YouTube has music videos and professional content, as well as a host of international and national “YouTube” stars with massive followings. As long as these creators do not change their priorities and make Facebook their prime location to distribute their videos, YouTube will stay relevant. But with the autoplay capability in user’s feeds alone, Facebook has something that YouTube cannot compete with.

The problem for YouTube is that its service has only been built for the pull consumption of videos. Users feel they want to watch a YouTube clip, so they look for it. Facebook on the other hand is currently focusing on the push consumption of video. It places videos in its user’s feeds based on their content preferences, likes and usage history. Now imagine Facebook would launch a dedicated service where all public video content would be centrally available, just like on YouTube. Suddenly, Facebook would cover both push and pull. And since YouTube itself is Google’s most social platform, there is not a lot YouTube could do to improve on the push side of video consumption. Because people only access YouTube when they are in the mood for videos.

Over the years, YouTube had to face many different challenges. But it never was seriously threatened by another big player. Maybe that is part of the explanation for why YouTube still does not generate profit for Google, and for that YouTube is not seen as a big innovator. Facebook’s powerful advances into YouTube territory have to make Google seriously worried. But this could be exactly the kind of pressure needed for YouTube to start re-inventing itself for the next 10 years. A music on demand service and an ad-free subscription service probably won’t be enough.