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US Internet Industry: What Alphabet, Facebook, Amazon Are Up To

PART:
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Part 4
US Internet Industry: What Alphabet, Facebook, Amazon Are Up To PART 4 OF 15

Facebook Watch Launches in the United States

Race for digital video ad dollars

Facebook (FB) has rolled out its video tab Facebook Watch to its US (SPY) audience as the company steps up competition with Alphabet’s (GOOGL) Google for Internet video advertising dollars.

Facebook finished 2Q17 with 236.0 million monthly active users in the United States and Canada on its flagship social media platform. The platform had more than 2.0 billion monthly active users worldwide at the end of the quarter.

Facebook users in the United States and Canada are the company’s most valuable audience, with ARPU (average revenue per user) of $19.38 in 2Q17 compared to $14.34 the previous year. ARPU for Europe (EFA) and ROW (rest of world) were $6.28 and $1.48, respectively, in 2Q17.

Facebook Watch Launches in the United States

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Impact of Facebook Watch on US and Canadian ARPU

The above chart shows the trend for Facebook’s US and Canadian ARPU. It remains to be seen if the launch of the video tab in the United States would boost Facebook’s US and Canadian ARPU. Facebook relies on advertising for most of its revenues. Advertising sales represented 99.0% of Facebook’s total revenue in 2Q17. The United States and Canada are among the world’s top ten advertising markets.

As Facebook runs out of newsfeed space to show ads (QQQ) (XLK), it’s looking to video to open up more space for ads. The company monetizes its videos by inserting ads inside of them.

Facebook to allow user-generated videos

The Facebook Watch video tab is accessible on the company’s desktop site and mobile and TV apps (applications). The tab allows users to subscribe to their favorite series, thus improving video content discoverability. Facebook intends to allow user-generated videos on the Watch tab over time.

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