Away from Social Networks, Facebook Should Investe in This Subsector

Away from Social Networks, Facebook Should Investe in This Subsector Even though videogame streaming business has about 950 million worldwide audience and generating profits in billions-dollars, it is still among most overlooked business from some companies. Facebook is one of these companies, althoug Facebook Gaming launched as a separate streaming service in 2018, but has since migrated to a tab within the main Facebook app. Facebook also doesn’t break out its videogame revenue as a separate segment, but it likely amounted to less than $100 million in 2019, according to a Tuesday note from Truist analyst Youssef Squali. That number could expand significantly if the number of hours watched on the platform rises to more than 20 billion in 2025, and Facebook increases the number of ads it serves viewers. According to Squali’s calculations, the company could generate $964 million in additional revenue under the optimal scenario. In addition, Squali’s team sees that videogame streming will looks like television and movie streaming as analogous, as there is no one company will be overwhelmingly dominant. Right now, Twitch, owned by Amazon.com (AMZN), has a 68% market share, and Alphabet’s (GOOGLe) YouTube has a 20% share. Facebook, which absorbed Microsoft’s (MSFT) faltering Mixer service earlier this year, has an 11% share, while Mixer had 1.4%. Overall the revenue generated by the platforms is roughly $6.5 billion, with the vast majority generated from ads. Two competitive advantages exist for Facebook: Its existing advertising business, including customers and technology, could make its videogame-streaming efforts more lucrative, according to Squali. The company also may be able to use its payments technologies as streamers—and people watching them—may buy things over the platform. Shares of Facebook fell 2.7% to $275.16 in recent trading, the third straight day of declines across the tech sector. The S&P 500 index was down 1.7%. Facebook stock has retreated more than 8% in the past three days.   You might also be interested in:

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