The world’s biggest social network wants to get into the pay TV business — by taking a page from Amazon.

Facebook is readying its biggest move into video to date: It wants to sell consumers subscriptions to cable TV networks like HBO and hopes they’ll watch those networks on its own apps.

The social network is talking to pay TV channels including HBO, Showtime and Starz about a proposal to sell those companies’ streaming TV services on Facebook. Consumers who subscribed to the channels could watch them on Facebook’s own properties — mostly likely via Facebook’s “Watch” hub — but could also likely view them on other platforms and devices, like Roku TVs.

It’s a model the TV guys are familiar with: Amazon has been doing something similar for a few years, and Apple is looking to do the same thing next year.

Industry sources say Facebook’s media team has been discussing deals with HBO and others for months and would like to launch the product in the first half of 2019. A Facebook rep declined to comment.

If it happens, it would be both a logical path for Facebook, given its big ambitions to become a video hub, and a big departure for the company: While Facebook has dabbled with e-commerce in the past, it hasn’t made a big push to sell anything directly to consumers.

Facebook has spent several years trying to convince media companies to create content for its 2.3 billion users, with limited results. But it has also signaled that it’s willing to spend money to acquire premium programming. In 2017, it bid $600 million in an unsuccessful attempt to stream Indian cricket matches; last month it began streaming a handful of old TV shows, including “Buffy the Vampire Slayer,” via a deal with 21st Century Fox.

Industry executives believe TV programmers will expect Facebook to shell out advance payments for multiple-year deals, which Facebook would recoup by pocketing some of the channels’ subscription fees. Platforms like Apple and Amazon generally keep 15 percent to 30 percent of any subscription revenue they generate.

Selling content or anything else to its users would be a significant change for Facebook, which has always kept its core service free and relies on advertising for almost all of its revenue. But sources say one of the reasons the company is interested in selling pay TV subscriptions is that the networks already spend lots of money advertising their services on Facebook. The logic: Instead of sending consumers who click on those ads outside of Facebook, the company could capture some of the revenue itself.

Recode – All Go to Source
Author:

Peter Kafka

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