Ok, so Facebook isn’t buying Roku but they should and I’m going to tell you why.
When Facebook launched Watch it felt to me they had jumped the shark in terms of product strategy. I’ve been saying this since last September. This isn’t to say they should not have a proper video feature but, the feature should not be based on content (long form scripted and unscripted) that creates friction with the core user behavior. They should be programming into the core behavior not against it. Adding features to compete with standalone services like Netflix or HULU really makes the already-bloated product feel overly bloated. More importantly, why would Facebook try to compete with those services inside the main Facebook product? It feels like they’re actually competing with themselves. If some of you want to cite Instagram and Snap as an exception you should know Snapchat is/was a feature not a business which is why I’ve shorted it since the IPO. Don’t get me wrong, I think SNAP has tons of potential but they seem to have a bit of an identity crisis and it’s TBD if it will be unlocked.
Trying to segue an audience from watching short, time-lapse recipes, feel-good segments and fails into long-form scripted content just ‘aint gonna’ happen. I’m sure there are some people that will say it’s an evolution of behavior not a pivot – they’re wrong. Throw into the mix a seemingly scattershot approach to programming and you have the current ball of confusion that is the Watch feature.
Facebook is a data company based on authentication and interaction with UGC and Facebook-friendly publisher content like Tasty, Fail Army and news. This and their ability to sell ads against that data are what have taken them to their current heights so, why don’t they continue doing it?
IMO, if they want to compete with NETFLIX, HULU and YouTube RED the logical step for them to take to get into original content would be to buy Roku. Why?
Well, speaking of user behavior, users go to Roku to watch original content and that’s it. They don’t want to watch someone get hit in the balls or a puppy lick an ice cream cone (shout out to Pet Collective!). They want to interact with companies like HULU, Netflix and Amazon that have actually gotten the video game right and don’t have conflicting user behavior built in to their platforms. I can hear some people saying that Amazon is a shopping experience and that’s not video. To that I say, Prime video is a standalone app, Prime video is free, Amazon has billions to spend, the difference between the core business of shopping and watching is so vast that there is no competition between the two behaviors like there is on FB and, contrary to that, there is actually a developing correlation between video consumption and purchasing behavior.
Most importantly, what do people need to do when they go to ROKU? The need to login. Who powers the largest authentication business on the web? Facebook. Why? Because everyone has a Facebook account, it’s easy and they get data from people’s behavior that makes it worth it for them to support that behavior. If Facebook bought ROKU they could either gate login or strongly suggest that users login with their Facebook accounts. Even if they don’t, they still control the authentication. This is core to Facebook’s business because they would play into being a platform that enables other businesses to operate while they can monitor behavior and sell ads.
Because subjective commentary on programming choices are generally useless, I will say that FB doesn’t need to get out of the original content business. They just need to shift that business to a contextual platform or shirt their programming approach to align with theirs. If they buy ROKU they control the shelf space. So, not only do they get to peak into the behavior of users interacting with competitive services to Watch, they get to launch their own originals and put it front and center on a platform where people want long-form content. They can call it Watch, FBV, Broccoli or whatever the hell they want. It doesn’t matter because it will no longer be a feature. It will be surrounded by relevant services where they can compete on the merits of their content not against their own existing user behavior where all kinds of analytics will be used to justify the successes and failures of the feature and its shows.
I think it will take about 1 to 2 years before Watch is shuttered or pivots but, eventually, Facebook will either launch a standalone video app, acquire their way into the original content business as a platform or a service or abandon it all together and focus on being a pipe for the content of others especially live content (i.e. MLB, NFL, NBA, NBC, etc.).