Facebook Watch

Facebook Watch is a video on demand service operated by Facebook. It was announced on August 9, 2017, with initial availability the day after, and with rollout to all U.S. users by the end of the month. Facebook Watch's original video content is produced for the company by partners, who earn 55% of advertising revenue while Facebook keeps 45%. Facebook Watch is the host provider for WWE's WWE Mixed Match Challenge.

Facebook Watch offers personalized recommendations for videos to watch, as well as categorized content bundles depending on factors such as popularity and social media engagement. Facebook wants both short-form and long-form entertainment on its platform, having a reported total of $1 billion in budget for content through 2018. Facebook monetizes videos through mid-roll advertising breaks, and plans to test pre-roll advertising in 2018.

History
Facebook announced "Facebook Watch", its own video on demand service, on August 9, 2017. The day after, it was launched for a small group of U.S. users, with a rollout to all U.S. users beginning at the end of August.

Content budgets
For short-form videos, Facebook originally had a budget of roughly $10,000-$40,000 per episode, though renewal contracts have placed the budget in the $50,000-$70,000-range. Long-form TV-length series have budgets between $250,000 to over $1 million. The Wall Street Journal reported in September 2017 that the company was willing to spend up to $1 billion on original video content through 2018.

Monetization
Facebook keeps 45% of ad-break revenue for content shown on Facebook Watch, while its content-producing partners receive 55% of ad revenue. In January 2017, the company announced that it would be adding "mid-roll" advertising to its videos, in which ads will appear in videos after users have watched at least 20 seconds. In December 2017, Ad Age reported that Facebook was lifting a long-time ban on "pre-roll" ads, an advertising format that shows promotional content before users start the actual video. Facebook had resisted using pre-roll ads because the format has a "reputation for annoying viewers" who want to get to the desired content, though the report stated that the company would nevertheless try the format. Steve Ellis, CEO of WhoSay, a social influencer marketing company, told Ad Age that "YouTube already established that people will sit through and tolerate pre-roll" and that "It's proven that they haven't sent consumers fleeing, so it makes sense that Facebook would pursue a similar strategy as it builds out its original content experience". Two weeks after Ad Age's report, Facebook updated its blog to note that the pre-roll advertising format would begin testing in 2018, and that there were going to be changes to mid-roll ads; specifically, they cannot appear until a minute into a video, and are only available for videos that run for at least three minutes, as opposed to the original rule of appearing after 20 seconds on videos potentially as short as 90 seconds.

Features
In the Watch tab, Facebook offers personalized recommendations of videos to watch as well as categories of bundled video content, including "Most Talked About", "What’s Making People Laugh", and "Shows Your Friends Are Watching".

Reception
Morgan Stanley analyst Brian Nowak estimates that "Facebook Watch" can bring in $565 million in revenue to Facebook by the end of 2018. Jefferies analyst Brent Thill has predicted that the service has the potential to earn $12 billion in revenue by 2022.