In our last article titled: ‘2015 – What’s In Store For Facebook,’ we wrote that Facebook (FB, Financial) needed to accelerate its growth in the long run. Of the initiatives we had suggested was foraying into the video segment. It seems Facebook is right on the track as we had predicted in our last article. Based on market reports, we had pointed out that since people spend more time on Facebook than watching the TV, Facebook can actually cash in on this opportunity and roll out a video business. Facebook is making advances in the video arena through the acquisition pathway. Let us take a closer look at the Facebook acquisition to drive the video business.
Facebook’s Video Move
Facebook has added another acquisition to their company. This time, the company has acquired QuickFire Networks, a startup that helps view high-quality video with low bandwidth.
Based in San Diego, Quickfire is known to quickly convert video formats and allow them to be downloaded with less bandwidth and without a loss in video quality. This acquisition shows how serious Facebook is about integrating videos to their social network.
Facebook stated in a blog post how it is seeing a major shift towards visual content, especially videos. The blog says that users have been increasingly sharing videos through 2014. Since June 2014, Facebook witnessed an average of more than 1 billion video views each day. Going by the numbers, there has been an increase in video posting by 75% which suggest the movement of the trend of users opting for video-sharing rather than written messages.
With the changing preference of users, Facebook’s acquisition of QuickFire will take Facebook closer to the growth process in the segment and speed up the process and functionality of videos on their platform. With QuickFire, Facebook would be able to provide an enhanced user experience about the performance of videos on their network.
Re/Code was quoted as saying that “part of this acquisition is due to Facebook’s strategy to promote video, and the introduction of auto play video. When users upload a video directly to Facebook, it will automatically play in the News Feed section of Facebook. A small change in the algorithm would mean that the more videos you watch, the more videos Facebook will show you and in turn increase its earnings ratios by displaying paid videos.
The Roadmap Ahead
From all the above activities, it is clear that Facebook is focusing in making its presence strong in the video segment. This technology proves to be beneficial as the service can compress videos to lower bit rates without compromising on its quality and increase it without increasing file size.
The market is also buzzing with reports that the QuickFire technology could also enable Facebook offer high-quality video to users in emerging markets where Wi-Fi and cellular data access are still not as developed as the western developed economies.
With this new initiative, Facebook will be able to promote video services to its users and might also considerable dent the clientele and viewership of YouTube, Google’s (GOOG, Financial) (GOOGL) Video business interface. The company could also monetize this service in due course of time to promote selected videos; a pattern also followed with Instagram.
Conclusion
This acquisition will take Facebook a step ahead as a great investment bet. As we had stated in our last article, if Facebook enters the video segment amongst a couple of other strategic movements, investors can expect a fairly good rate of return in the long run. By making this strategic acquisition, Facebook has cemented its position as the market leaders in the social media and networking sector and is likely to gain investor’s confidence in the long term. For now, it would be best to step up our stakes in the social networking giant and keep an eye for the next strategic moves to come from Facebook and accordingly increase our holdings in the company.
