Zuckerberg bets future of Facebook on video, Instagram

Bloomberg

Facebook Inc. Chief Executive Officer Mark Zuckerberg is betting the company’s future on video and disappearing posts called “stories,” not the company’s famous news feed. Investors are buying into the vision for now.
The newer products may make less money and steal user attention from the main stream of photos, comments and lucrative ads on the social network, Zuckerberg warned. Marketers aren’t totally comfortable with the new formats yet, and 2019 will be another year of significant investment, he added on a conference call with analysts.
Still, the CEO said the opportunity will be bigger than the news feed over time. Chief Financial Officer David Wehner also calmed concern about costs next year and quarterly earnings from
the company suggested its business is holding up in the wake of scandals and privacy breaches.
Facebook shares rose 3.9 percent in pre-market trading, after closing at $146.22 in New York. Earlier this year, the company said revenue growth rates would decline in the third and fourth quarters, sending shares plummeting. That set a low bar for the results.
The company’s flagship social network has almost reached saturation point in terms of its growth, especially in the US and Europe. And new Facebook users often live in less-lucrative advertising markets. That’s left company spending heavily on more experimental projects.
Future revenue growth depends on Facebook’s ability to shift marketers’ interest to new ads in messaging services, and marketing spots embedded in a popular way of sharing called “stories,” especially on Instagram. In those formats, users post videos about their day that disappear within 24 hours. Users tap through them and see ads in between.
“I want to be upfront that even assuming that we get to where we want to go…it will take some time and our revenue growth may be slower during that period,” Zuckerberg said.
Facebook Watch and Instagram TV, the company’s two video services, are way behind Google’s YouTube in terms of size, Zuckerberg said. The stories format is popular on Instagram and WhatsApp, but on the main social network it’s just starting to gain traction. Suitable ads are difficult to make, he added. Still, Zuckerberg thinks this is how users will share information in the future.