Facebook (FB) Eyes Hollywood To Boost Original Content

Facebook Inc (NASDAQ:FB) is aggressively ramping up its original content efforts. Per media reports, the social media giant is in talks with several Hollywood agencies to acquire TV-style content.

Facebook is interested in both long- and short-duration scripted shows with ad breaks and is targeting the 13–34 demography. The emphasis remains on the core 17–30 age group, add media reports.

The company, reportedly, has a few shows in the pipeline like the drama, Strangers, and a game show called Last State Standing. Some of these could be released as early as this summer. The company will apparently shell out as much as $3 million per episode for high quality content.

However, Facebook is refraining from streaming any type of content that might be deemed offensive. Reportedly, it wants to steer clear of broadcasting any “political dramas, news (or) shows with nudity and rough language” on its platform.

Facebook remains hawk eyed on boosting “live” video viewing on its platform. This is to bring in more ad dollars, which remain the mainstay of the company’s revenues with over 95% contribution. In May this year, Facebook reportedly brought on board several content creators (which target mostly millennials) like ATTN, Vox Media, BuzzFeed and Group Nine Media to produce shows for its upcoming video service.

Earlier, the social media giant also unveiled a new TV app to enhance video-viewing experience. The app will be initially available in app stores on Apple TV, Amazon (NASDAQ:AMZN) Fire TV and Samsung (KS:005930) Smart TV, and will be rolled out to other platforms gradually. Also, Facebook hired an ex-MTV executive, Mina Lefevre, to spearhead its video-viewing efforts on its platform.

Video ads generate more revenues than its photo and text-based counterparts. As a result, Facebook and a host of other social media sites, like Snap Inc. (NYSE:SNAP) and Twitter (NYSE:TWTR) , are trying to incorporate an increasing amount of video-oriented content to bring in more ad dollars.

Snap, the parent company of Snapchat, has also inked a two-year $100 million content deal with media giant, Time Warner Inc (NYSE:TWX). Under the terms, Time Warner will be creating 10 shows for Snapchat across various genres. Popular talk shows like Ellen DeGeneres and Samantha Bee could also be available on Snapchat, per reports.

Even tech behemoths like Apple Inc (NASDAQ:AAPL) are foraying into this arena. Close on the heels of announcing its first reality TV series – Planet of the Apps, the Cupertino-based tech giant also brought on board two top TV executives – Jamie Erlicht and Zack Van Amburg – to manage its video-programming efforts. They will report to Apple’s senior vice president of Internet Software and Services, Eddy Cue. Both Erlicht and Amburg were with Sony Corp (T:6758) (SNE) for the last 12 years, serving as presidents of Sony Pictures Television.

In addition to Planet of Apps, other series in the pipeline include documentaries on Sean Combs and Clive Davis, as well as Carpool Karaoke, a series based on a segment of the James Corden’s Late Late Show.

Meanwhile, one of Facebook’s investors, Gerber Kawasaki's Investment Group Leader, Ben Dunbar was apparently wary of the company’s original content push. He was quoted by CNBC saying that “Hollywood is a completely different monster. People have come into Hollywood for a long time and they dump money into it and then, you know, you don't see success.” He further stated that though Facebook is "doing really well in all their other businesses, but content is a gamble.”

He added that despite being lucrative, this field is highly competitive as well. This is because Netflix (NASDAQ:NFLX) and Amazon already dominate the scene with their award winning series. Reportedly, Netflix and Amazon will be spending $6 billion and $4.5 billion on content this year, respectively.

Zacks Rank and Share Price Movement

At present, Facebook carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The company has outperformed the Zacks categorized Internet Services industry in the last one year. Facebook’s shares increased 40.9% compared with the industry’s gain of 31.9%.

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