Facebook Watch was a video platform launched by Facebook in 2017 as a competitor to YouTube and other online video platforms. It allowed users to upload, view, and share videos just like on YouTube. However, in June 2022, Facebook announced that it would be shutting down the Facebook Watch web platform and mobile apps to focus more on Reels and recommended videos in the main Facebook app. There are several reasons why Facebook may have decided to remove the standalone Facebook Watch platform.
Lack of Viewership and User Engagement
One of the main reasons cited for the shutdown of Facebook Watch was that it failed to gain significant viewership and user engagement. When Facebook Watch first launched, Facebook promoted it heavily and spent over $1 billion in contracts to attract content creators. However, over time it became clear that Facebook users simply did not watch enough videos on the Watch platform. In 2021, Facebook reported that 140 million people spent at least one minute per day watching Facebook Watch videos. While 140 million may sound impressive, it pales in comparison to YouTube’s over 2 billion monthly active users who spend hundreds of millions of hours per day watching YouTube videos. With such a massive difference in viewership, it is not surprising that Facebook struggled to get creators to prefer Facebook Watch over YouTube. Low viewership likely led to less revenue generation from video ads on Facebook Watch as well.
Strong Competition from YouTube
YouTube already had a stronghold on the online video market by 2017 when Facebook Watch launched. YouTube was a pioneer in online video sharing and had over a decade to optimize the platform for both viewers and creators. When YouTube already worked so well, Facebook Watch had a very uphill battle to lure away creators and viewers. Most creators found they received many more views on YouTube, so they had little incentive to prioritize Facebook Watch. Viewers were already accustomed to watching videos on YouTube, so did not have much reason to switch their behavior. The strong network effects and lock-in that YouTube already enjoyed proved extremely difficult for Facebook to overcome.
No Standout Features Compared to YouTube
Facebook Watch did not seem to offer any radically new features or value propositions compared to YouTube. The core functionality was quite similar – upload videos, view videos, comment, like, subscribe to channels, etc. Some differences like the focus on live shows did not end up getting much traction. Without a unique selling point, there was little reason for either viewers or creators to make Facebook Watch part of their regular online video habits. YouTube already satisfied their needs well enough.
Shift in Facebook’s Video Strategy
Facebook’s strategy around video sharing and monetization seems to have shifted over the past few years. After realizing that Watch was not gaining the traction they had hoped for, Facebook seems to have pivoted to prioritizing different video initiatives:
Focus on Short-Form Video
Facebook is now viewing short-form, TikTok-style videos as the future of online video. They have invested heavily in their TikTok clone Reels, including opportunities for creators to monetize with ads. Reels is directly integrated into the main Facebook app and can leverage Facebook’s massive existing user base. Facebook likely sees more potential in getting existing users to casually scroll through Reels than trying to build a standalone long-form video platform.
Video Recommendations in News Feed
Rather than confining videos to the Watch tab, Facebook is now integrating recommended videos directly into users’ main News Feeds. This increases chances of videos going viral as users scroll through their feeds. Focusing on the News Feed also allows Facebook to maximize watch time and ad revenue. Just as text posts in the News Feed are monetized, recommended videos can also contain ads.
Live Streaming
Facebook is also investing in live streaming capabilities, especially for creators and influencers. Live video can help creators engage directly with their followers in real-time and potentially receive donations/tips. Facebook is porting some of these live streaming features over from Facebook Gaming to appeal to a broader creator audience.
Ineffective Monetization
A major goal of Facebook Watch was to monetize and generate revenue from videos through advertisements, similar to YouTube. However, it appears that Facebook struggled to monetize Watch videos effectively. There are several possible reasons for this:
Lower Viewership
With Facebook Watch’s limited viewership compared to YouTube, there was a smaller audience for ads. Advertisers likely saw better return on investment spending their budgets with YouTube instead.
Less Data to Target Ads Effectively
Facebook has user data that allows it to target ads effectively on its core platform. However, Facebook Watch did not seem to have accumulated enough viewer data to allow highly targeted video ads. Without precision targeting, video ads on Watch may have been less relevant for viewers.
Unwillingness of Viewers to Sit Through Ads
Users on YouTube have become accustomed to seeing ads before and during videos. However, Facebook users were less familiar with video ads interrupting their content. They may have been less willing to sit through ads on Facebook Watch videos.
Creators Prioritized YouTube Ad Revenue
Top creators could monetize their content much more successfully on YouTube through the YouTube Partner Program and ads. Therefore, they had little incentive to bring their content and loyal fanbases over to Facebook Watch.
Facebook’s Changing Priorities and Business Goals
Facebook’s priorities as a company have shifted over the past few years, which likely also contributed to the decision to remove Facebook Watch:
New Focus on the Metaverse
Facebook has staked its future on building the metaverse through massive investments in virtual and augmented reality. As it pour resources into its vision of an immersive digital world, products like Facebook Watch likely became less of a priority.
| Year | Metaverse Investment |
|---|---|
| 2021 | $10 billion+ |
| 2022 | $15 billion+ (projected) |
Emphasis on Reels over Watch
As discussed above, Facebook sees Reels as the future of video sharing on its platform. Therefore, it is devoting more resources to that product instead of trying to salvage Facebook Watch. Reels has the potential to help Facebook continue to attract younger users, which is crucial for its continued growth.
Concerns Over Declining User Growth
After seeing stagnating and even declining user growth in lucrative markets like the US and Canada, Facebook seems to be focused on products that can reignite growth. While Facebook Watch was unlikely to be a significant driver of new users, Reels has much stronger potential if it can successfully compete with TikTok.
Privacy and Regulatory Headwinds
Facebook has faced growing privacy concerns and regulatory scrutiny around the world in recent years. Though not directly related to video, these wider issues may have contributed to the decision on Facebook Watch in the following ways:
Reduced Data Collection
To address privacy criticism, Facebook has reduced the amount of user data it collects across its products. However, rich user data likely would have helped improve video recommendations and targeting of video ads on Watch. More limited data makes it harder to compete with YouTube’s advanced recommendation algorithms.
Regulatory Threats
Government antitrust regulators have started taking action against Facebook’s alleged anti-competitive practices. For example, the company is battling an FTC lawsuit trying to force it to divest Instagram and WhatsApp. While nowhere near as dominant as Facebook’s core platform, removing Facebook Watch is one less potential target for regulators.
Reputational Damage and Controversies
From the Cambridge Analytica scandal to arguments that its platforms enable the spread of misinformation, Facebook has faced massive backlash in recent years. The constant negative headlines likely make it harder for new products like Facebook Watch to gain traction. Users do not have a very high level of trust in Facebook’s products anymore.
Conclusion
Facebook Watch represented the company’s big bet on pivoting into video and competing directly with the YouTube juggernaut. However, in the end Watch failed to pose any real threat to YouTube’s dominance. Thanks to stronger network effects, a head start of over a decade, and advanced recommendation algorithms, YouTube was able to fend off the challenger. With Watch failing to gain meaningful viewership and revenue, Facebook decided to pull the plug in mid-2022. Its video strategy has now shifted to focusing on short-form Reels and recommended videos in the News Feed. Only time will tell whether these new initiatives have success in an online video market still overwhelmingly controlled by YouTube.