In The Streaming Video Space, Can Facebook Trump YouTube?

As Amazon.com, Inc. (NASDAQ: AMZN) launched Video Direct to compete with YouTube, let's see what makes YouTube, the prized asset of Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL), unbeatable in its space. However, the advent of Amazon Video Direct has also brought to the spotlight another potential contender in the streaming video, social space: Facebook Inc (NASDAQ: FB).

How do the latter two Internet/social media monoliths stack up?

The Reigning Favorite: YouTube

Bernstein's Carlos Kirjner laid out the following interesting stats on YouTube:

• The analyst estimates that as of the first quarter, YouTube had between 1.83 and 2.15 billion videos, "corresponding to 11.8 billion minutes, or 197 million hours of content."
• "The number of videos in the library has grown an estimated 35 percent YoY last year, or by an estimated 493 million videos, while the number of hours of video content has grown 69 percent or by approximately 3.9 billion hours."
• "It would take a team of 286 people their whole lifespan to watch all videos on YouTube, assuming they started the second they were born and lived the average lifespan of a US citizen."
• "To date, YouTube videos have been watched an estimated 39 trillion times for approximately 196 trillion minutes (nearly 400 million years)."

Related Link: Dan Kurnos On Amazon's Video Direct: Don't Hold Your Breath

Facebook Shares Make It A Contender

This explains the scale and reach of YouTube. Facebook too has its share of scale, engagement levels and billions of video views on its platform (not to mention Facebook's advantage over YouTube in terms of sharing). But, the social media giant's relatively low content library makes it difficult to compete with YouTube.

"Yet, we suspect that even for Facebook, it will take time to create a content library comparable to YouTube's, in breadth, diversity or scale," Kirjner wrote in a note.

He added, "[W]e believe that to drive video ad loads up significantly from current levels (e.g., 3x) Facebook would have to introduce pre-rolls, and for that to succeed at scale with brand advertisers, it needs a large library of professionally or semi-professionally produced content that advertisers deem 'brand safe.'"

Other Competitors On The Horizon?

Kirjner highlighted that even if at-scale alternatives to YouTube emerge, (e.g., within Facebook), "it is probably the case that there is enough total user engagement and advertising dollars in TV-land to support both."

"YouTube will likely be the leading online video consumption platform for a long time to come, and the recipient of large and growing portions of brand advertising budgets, whether or not others (including Facebook and Amazon) manage to scale up an alternative," Kirjner noted.

In an another analysis, the analyst said 1 percent of YouTube videos correspond to 93 percent of views and 94 percent of viewing time since inception is also concentrated in about 1 percent of the videos in the library.

The above statistics present a significant risk – certain channels could eventually "extract increased, disproportionate value from YouTube and/or defect to emerging competitors such as Facebook or Amazon."

However, Kirjner noted that this risk is "mitigated by the sheer scale and scope of YouTube and the likelihood that genre-focused sites will appeal only to a segment of users."

"Our data suggest that YouTube is more like a vast and fast growing video content library with great search and discovery capabilities than a social medium for video distribution," Kirjner added.

The analyst also noted that the acquisition of Twitter Inc (NYSE: TWTR) or Snapchat would not narrow or close YouTube's social gap. In fact, the data gathered by the analyst and recent disclosures by Google on the evolution of YouTube's engagement show that this social gap is not material, and "a large acquisition for this reason would be a bad idea, even if a good target were available."

At Time Of Writing...

• Alphabet (GOOG) was down 0.23 percent at #721.49, while GOOGL was down 0.37 percent at $736.61.
• Facebook was down 0.37 percent at $120.06.
• Amazon was up 2.01 percent at $717.19.