The end of Facebook (as we know it)

Facebook

If you want to read a German version of this article, you find it here.

Even if Facebook has bought and created various new apps over the past years, this has not changed the public perception as Facebook primarily being the company in charge of the newsfeed-based social network carrying the same name. That’s not strange of course.

But 2015 is about to bring a paradigm shift. The “original” Facebook is losing its exclusive role as core product. The company is turning into a multidisciplinary online conglomerate which was built on the massive success of facebook.com, but which thanks to a couple of smart acquisitions and intelligent decisions now operates various competing, almost equally relevant apps and services connecting people. While the rather young success brands Instagram, WhatsApp and Messenger all are still in an early phase of the product life cycle, the social network facebook.com has reached a mature stage in which its relevancy slowly is fading. At least that’s the case for the markets where the service achieved mass adoption many years ago.

One can compare the market position of facebook.com with an automobile make which had been a long-term sales hit. Demand is still pretty good and margins are splendid. However, it is not the most new, most exciting car on the market anymore, and some of the potential clients look elsewhere for a more state of the art type of car.

Numerous reports claim that teenagers have lost their sympathies for facebook.com. Taken individually the accuracy of these accounts and surveys is often not clear. But the sheer number of reports that all come to the same conclusion leave little doubt about the overall validity of the theory: Younger users lose their interest in the original Facebook product, instead spending time with chat, messaging and media sharing apps.

Reverse network effect

The disappearance of young users from Facebook’s original product does not immediately affect other user groups. But if the teens are not coming back – which is pretty unlikely that they will – this dynamic can easily lead to a reverse network effect. With each user that gets inactive, the value of facebook.com decreases a bit for this users’ contacts. In the worst case scenario this can lead to a vicious circle. Being a smart guy who has witnessed the demise of other social networks, Facebook CEO Mark Zuckerberg is fully aware of this potential threat. One can assume that he increasingly sees facebook.com as a cash-cow that must be milked as long as possible.

Thanks to the bold, but smart acquisitions of Instagram and WhatsApp as well as the initially unpopular but nevertheless successful unbundling of the private message feature into the Facebook Messenger, Mark Zuckerberg has now three young horses in the race. All three services are expected to advance a lot in the near future.

WhatsApp

Spotlight on Messenger and WhatsApp

Messenger and WhatsApp will evolve and grow much bigger over the course of the next months and years. Messenger most likely will launch a feature to let users chat with businesses and brands. WhatsApp is not only about to receive VoIP features but could also be promoted by the parent company as a tool for news distribution. Already today an increasing number of online media sites offer updates via WhatsApp, despite the big amount of manual work involved for publishers and the lack of a satisfactory reading and information management interface for users.

It would be surprising if Zuckerberg and WhatsApp CEO Jan Koum just ignore the obvious demand from media sites as well as news consumers. Another option would be that even here Messenger comes into play, while WhatsApp is being kept truly focused on instant communication without too many frills. The case for Messenger as the main place for future experiments is supported by the fact that Messenger relies on their Facebook user ID, which integrates with Facebook’s advertising network – another highly important element of the company’s product package.

Even Instagram will most likely just get bigger and bigger, starting to generate serious revenue for the parent company. And let’s not forget that Facebook owns the virtual reality company Oculus VR. In the wake of the acquisition by Facebook it was said that it would take years until Oculus releases a VR headset ready for the mass market. But early surprises should not be ruled out anyway. And neither should unexpected product launches that extend the activities of Facebook Inc into other areas of the digital life.

At the end of March Facebook will hold its developer conference f8 in San Francisco. Afterwards we’ll have a more clear picture about the strategic roles the various company divisions are expected to play in the future Facebook universe. But already now one thing is obvious: Consumers, journalists, observers and even investors need to change their understanding of what Facebook is: It is not “the company that runs facebook.com” anymore. It is “the company that runs facebook.com, Instagram, Messenger, WhatsApp and a bunch of other things”. Even though Mark Zuckerberg most certainly would not admit that at this point, but in mature markets facebook.com has reached its peak. It will slowly, over the next several years, lose impact, while the other products operated by the company will gain impact and make up an increasing share of the total revenue generated by facebook.com.

The end of Facebook as we know it – as the company behind the popular blue-white social network – is here. The new Facebook runs a couple of very successful services, of which one happens to be facebook.com.

4 comments

  1. One thing that this recent tragic plane crash revealed, is that it’s still very early in FB’s new “family approach” from one dominant Facebook to many equal networks.

    My reasoning is as follows. I work in social media and it’s only been weeks since FB introduced/rolled out a new option that allows for relatives to put FB accounts of people who passed away into “Remembering”-mode. I knew a few of the plane crash victims and their accounts have been put in Facebook’s new remembering status, which is a great function offering control to surviving family members.

    Not so for their Instagram and Whatsapp Accounts though. There is not even a way for relatives to put Instagram accounts into private mode so that the media can’t take advantage of the pictures.

    It’s quite odd to me that FB comes up with such a new function for its oldest main service, but there’s still enough internal company isolation of teams, that noone thinks ahead and adopts such functionality for their younger networks as well. As if different rules would apply. It’s an odd split emphasized by this tragedy.

    • Sorry to hear that you knew some of the people from that plane!

      Interesting observation. Likely that this will change rather quickly maybe after the recent events.

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