Facebook: Portal for On-Demand Video?

Article ImageSimply put, there is likely no website in the world as popular as Facebook. According to Facebook’s IPO filing released in February, there are 845 million active monthly users of Facebook worldwide. Each of those users spends an average of 20 minutes on the site per visit—although, as anyone who’s caught himself looking at pics from his old college roommate’s recent trip to Vegas can tell you, 20 minutes is probably a low estimate for a lot of people.

Of course, there are already plenty of ways to occupy your time while on the popular site, from playing Words With Friends to perusing your newsfeed, but Kent Steffen sees more. Steffen, president of Content Direct at CSG International, a global provider of software- and services-based business support solutions, sees a way to help Facebook evolve into a center for on-demand video entertainment. Steffen freely admits he’s not the first to have this idea. Indeed, it’s something the social networking giant already seems to have embraced.

“In terms of traditional entertainment, like TV or movies, we’ve seen Facebook as an additional channel for a while where series and films have been promoted,” he says. “It’s a place where fans can congregate to share ideas and thoughts about what they’ve seen, what they hope to see, where they think the story is headed, and so forth.

“But,” Steffen adds, “more recently—in the past year—we’ve seen Facebook as a portal for delivering video, with apps that allow consumers to purchase or rent and view films. In that sense, we’re seeing the next step for where Facebook is headed—not just a place for people to talk about what they’ve seen, but a place where people can actually consume content.”

Steffen notes that, for example, when the latest Mission: Impossible movie came out last year, if you went to the movie’s Facebook page, there was an app that allowed you to rent and watch, on Facebook, the previous three films in the franchise. So, he says, the idea of an on-demand video experience already exists.

“Where you’d like to see this evolve would be to something that’s even more seamless for the user,” he says, “where you don’t necessarily have to install an additional app to access content, and where you’d have even more integration between purchases made via Facebook and a consumer’s personal digital locker in, for example, the UltraViolet environment.”

When it comes to helping companies deliver content to consumers, Steffen knows whereof he speaks. While he can’t publicly name any clients, he says CSG has “created a variety of online channels, storefronts, and capabilities for major Hollywood studios, gaming providers, and other large media brands that enable them to deliver a variety of content direct to consumers and to monetize that content in a variety of ways that go far beyond advertisement.

“In regards to Facebook in particular,” Steffen continues, “we’ve pioneered some of the integrated apps that deliver entertainment content through Facebook and enable consumers to purchase it using Facebook credits.”

The idea of being able to watch on-demand video on the internet is, of course, nothing new, with sites such as Netflix, Hulu Plus, and Amazon Prime going head-to-head to attract eyeballs. So does this mean Facebook is poised to join this streaming video battle royal? Not necessarily. Steffen says that while “in the sense that everyone is competing for revenue-generating digital content transactions,” Facebook could compete with those sites; however, he feels it likely makes more sense that Facebook is a “facilitator—a conduit through which those competing groups as well as studios, retailers, ecosystem owners, etc., are trying to attract users.”

Now, a complete, on-demand video experience for a newly released film—offering trailers, behind-the-scenes clips, interviews with the stars, and more—usually already exists on the film’s website, which is designed by the studio itself. But Steffen doesn’t necessarily think an enhanced movie page on Facebook would be a competitor for a site put out directly by the studio.

“The ideal for studios is to attract consumers directly to their online storefronts and sell to them that way,” he says. “But Facebook has such a huge, active, and loyal audience that it has to be embraced as a channel, one way or another, for generating interest among and revenue from consumers. So, it isn’t necessarily a question of one or the other; it’s more a matter of building a set of diverse and profitable channels in order to grow revenue.

“But that’s not different strategically than it would be for any other business that generates revenue through both direct and indirect channels.”

That part about revenue is key. Facebook’s IPO has been in the news a lot lately, and while Steffen says it wouldn’t be appropriate for him to comment on it, he did say “a lot of the expert opinion I’ve heard and read about Facebook’s IPO seems to argue that Facebook will need to generate revenue through means other than advertising in order to justify its valuation.”

Steffen says that if what he’s heard is true, “then e-commerce is an area where Facebook probably needs to lead. Digital content sales is one segment of the e-commerce market, and obviously one that we believe is increasingly important.”

At the end of the day, while Facebook may be—in a word—huge, it’s still a business, and “any business needs to find new ways to grow,” Steffen says.

“The digital content market is growing massively,” he adds. “If you’re a big online channel with a massive audience, like Facebook is, then you probably want to find a way to capitalize on the growing, global revenue opportunities in the digital content business. If everyone is competing for consumer transactions, then the way to win is to find the most effective ways to capture and monetize as many profitable transactions as you can.”

Perhaps beefing up Facebook’s on-demand video experience is one of those ways.