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Facebook launches YouTube competitor

There can be little doubt about how much (Alphabet) Google-owned YouTube has changed the face of video. TV is not the clear dominant category that it once was.

Huge sums of money are shifting towards online advertising, with a large portion of this going to YouTube. Netflix is also a big disruptor in the online media space, however the key difference is that it doesn’t generate any advertising revenue – it is just subscription fees.

As more time is spent watching YouTube and not traditional TV, more advertising money will shift towards online media and away from businesses like Seven West Media Ltd (ASX: SWM) and Nine Entertainment Co Holdings Ltd (ASX: NEC).

A key attraction of YouTube is the various channels run by people or organisations offering specific content. Vlogs, beauty, gaming, educational content, podcasts and every other type of family-friendly content you can think of can be found there.

However, even the disruptor can be disrupted. Facebook announced it is rolling out its video-stream service, Watch, worldwide.

People will be able to watch a range of shows from established brands and new ones. Facebook also will allow content creators to add advertising breaks, assuming they achieve certain metrics. US, UK, Ireland, Australia and New Zealand will be the first to have this opportunity – the revenue will be shared 55% with creators and 45% with Facebook.

Facebook joins the pack wanting to carve out an online video empire. Amazon is also trying to create interest by investing sums of money into a few shows to gain viewers such as The Grand Tour and an upcoming Lord of the Rings series.

Facebook Watch has a few celebrities lined up to feature including Jada Pinkett Smith, Elizabeth Olsen and Bear Grylls.

As we know all too well, Facebook has a lot of information on our profiles and preferences. This could be important to attract advertisers.

To start with this move won’t have much impact, but I think in time it could hurt traditional media even more. It certainly adds another reason why Facebook is an attractive growth share.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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