Yahoo and Google face challenge as social media sites aim to be video gateways

The humble TV is in danger of being overtaken by video, considered by many as the next frontier in business, and Facebook and Snapchat are taking the reins

PUBLISHED : Thursday, 10 November, 2016, 10:04am
UPDATED : Friday, 11 November, 2016, 5:15pm

Facebook and Snapchat have overtaken the homepages of Yahoo and Google as the front doors to the internet for hundreds of millions of people. Now, the two rivals are pursuing a much bigger challenge: surpassing television to become the dominant gateway to video.

Tech firms see video as the next frontier of their business, and app makers and video producers are already making strides in creative and business concepts. Whether they stand a chance is being tested in small studios and corners of offices around the world.

In Venice on a recent Friday afternoon, make-up artist Amber Talarico brushed eyeliner onto Kristin Lai. As two digital cameras and a computer broadcast the scene to thousands of Facebook users, Talarico slowly and without commentary dressed Lai to resemble a creepy doll from a horror movie.

The transformation show Becoming has drawn almost 200,000 viewers an episode (three seconds counts as a view on the social network; TV’s Nielsen ratings require one minute of viewing).

“Significant,” says Jon Handschin, president of online media company Moviepilot. “I don’t think the numbers have to be millions.”

If his guess is right in the long run, Moviepilot and its roster of shows for Facebook’s live-streaming service could turn what it calls Super News into a must-watch channel for film junkies (the company describes it as the CNN for nerds).

For now, Moviepilot’s Super News division is among the first attempts at designing a media business on Facebook’s or Snapchat’s video systems.

Recurring shows are hitting Facebook from cable companies such as E! and business news provider Cheddar. Individuals throughout the US are making it central to entertainment start-ups, such as Brittany Sparacio, who three months ago started plucking pearls from oysters live on Facebook and selling the jewels online.

“We have customers [who] say they will drop their cable and Netflix for this,” Sparacio says in a conversation over Facebook’s chat app. “We go live four or five times a week, and we sustain 3,000 to 4,000 viewers every night.”

Facebook is adding perks that appeal to those who treat its live video platform as a business, announcing recently that it will allow producers to schedule streams in advance.

A Snapchat spokesperson says the Venice company is focused on fostering video channels through Discover, a featured section of its app where old guard media companies such as the Economist and young standouts such as BuzzFeed supply articles and videos.

Snapchat has co-invested in two media brands exclusive to Discover. With Vertical Networks, founded by veteran TV executive Elisabeth Murdoch, it’s working on men’s channel Brother and more to come. With Hearst, the part-ESPN and A&E owner, it’s backing lifestyle channel Sweet.

“If Snapchat is this generation’s TV, then the brands that are being built there have a resonance for this generation that’s really powerful,” says Ross Clark, who was hired to run Sweet. “It’s a place where real businesses can be built.”

Clark says he draws inspiration from TV channel Bravo and magazines such as Wallpaper and New York. Consumers have been intrigued. About 15 million viewers a month – a third in the US – tune in to Sweet to learn about what’s hot in fashion, food and art. L’Oreal, Apple and Gucci have advertised on the channel.

Investors say they want to see more entrepreneurs spin up video companies that emphasise Facebook, its Instagram image-sharing app, Snapchat and, to a lesser extent, Twitch and Twitter.

The interest follows years of investment in companies anchored on YouTube, some of which sold to media giants including AT&T, RTL Group and Walt Disney.

YouTube has come closer than any video app to surpassing TV. But industry experts say the service is flooded with competition, associated with on-demand viewing and set in its style. Facebook and Snapchat represent uncharted terrain and potentially more lucrative opportunities, so that’s where money is flowing.

Disney already has backed two young media companies from the post-YouTube wave: Naritiv, a marketing company now seeking to develop a consumer brand on Snapchat, and Nom, a live-video and social networking app aimed at those who would watch Food Network all day.

Facebook is in the early stages of devising a formal way for publishers to make money from video on its service. Snapchat doesn’t have any revenue offering for third parties, save for partners on Discover with whom it splits ad revenue. That’s a significant concern that’s led Sam Landman, a managing director at Comcast Ventures, to hold off on backing recent media startups he’s seen. But he’s optimistic that business plans rooted in a mix of selling ads, subscriptions and syndication rights will eventually make sense.

“We do believe people are willing to pay for content, certainly if they are passionate about the brand,” Landman says.

Former executives at companies built upon YouTube say success comes down to who starred in and made the shows. Nurturing people popular on a certain app and integrating them into productions might be the best way to go.

At Moviepilot, Handschin has been satisfied with Talarico, a nine-year veteran of make-up and special effects, and the rest of the Becoming crew.

He chimes in at weekly production meetings, lobbing questions about how they might involve guest stars, be more cost-efficient or be more responsive to viewer comments on the Facebook stream.

He passes on lessons, such as talk shows don’t seem to draw viewership on Facebook Live, but flying drones and playing games work well.

When Moviepilot launched in 2012, co-founders Handschin and Tobi Bauckhage deliberately tied the firm’s fate to heavy reliance on Facebook. They have no plans to back off. It’s one reason Handschin doesn’t want to study or hire from traditional TV’s top ranks.

“It would corrupt us into something we wouldn’t want to succeed at being,” he says. “I’m looking for the 22-year-old who can create the most astonishing Snapchat story.”

If anything, he worries about his producers leaving to start their own online ventures because he would if he were them. As the hour-long production of Becoming wraps up, producer Sarah van der Watt says Facebook Live does have a unique perk.

“No need for editing,” she says. “We’re just done.”