Facebook set to steal more TV ad dollars as video views soar
By Tenzin Pema and Abhirup Roy
Along with Facebook's (FB.O: Quote) strong financial results released on Wednesday was a number that should send a chill through the cable and broadcasting industry.
The social network - whose shares rose 5 percent to hit a record high of $109.44 on Thursday - said its video views surged to 8 billion per day in the third quarter, from just 1 billion a year earlier, highlighting a rising threat to TV ad revenue.
The growth in video views presents the most significant near-term opportunity for Facebook as the company looks to grab a bigger slice of the TV advertising market, analysts said.
Cable companies in particular face an increasing threat to revenue as consumers switch to online streaming services such as Netflix and Hulu - a trend known as "cord-cutting".
"We think (Facebook) looks well positioned to capture an increasing portion of TV ad budgets as markets migrate toward data-driven, highly targeted online video ad campaigns," Jefferies analyst Brian Pitz said in a client note.
The online video ad market is likely to be worth about $17 billion a year by 2017 in the United States alone, Pitz said.
Time Warner Inc, the owner of cable channels TNT, TBS Cartoon Network, said on Wednesday that ratings for its key U.S. entertainment networks had dropped more than expected, which will result in a fall in ad revenue next year. Continued...