Facebook Earnings Call Review and the Social Media Landscape
A couple of weeks ago, Facebook reported third quarter earnings and detailed the latest metrics for the Company. In their report, revenues continue to grow at a very healthy 33% from prior year to $13.7 billion. This revenue is global and is possible given the advertisers interest in user engagement and attention on their platforms. Facebook reported that 1.5 billion users use one of their platforms on a daily basis whereas 2.3 billion people use it on a monthly basis. If we distribute that revenue, it demonstrates that each daily active user provided $9.13 of revenue last quarter. This comes out to $0.10 per day. However, this revenue is only accretive to Facebook as a Company as the users do not get any part of that revenues. Therefore, this demonstrates that the business model here is that the users are the product, not the customer. The customer is actually the advertisers who want the users attention and data to market products and services to.
I like to compare these metrics to the #STEEM rewards pool and the potential it brings to its users which are both the creators and consumers of the content create in the ecosystem. As per a recent review from steemd.com, the rewards pool was approximately at 785,832 STEEM valued at $561,084. As per @arcange, there are approximately 50,000 daily active users on the blockchain. Given that the rewards pool has a seven day payout, the average daily payout per daily active user is $1.60! So not only do the users of #STEEM solely benefit for our own attention, but we create more value per user than Facebook! This is in addition to the benefits of its decentralized nature which makes it borderless, censorship resistant, and respecting of privacy. I find these metrics very promising given how development is still only beginning on the ecosystem.
As I continued to analyze the earnings conference call, I found interesting commentary about the focus the Company has moving forward as the social media industry continues to mature and evolve. First, Facebook is seeing dramatic growth in the use of video across their apps. We, in the #STEEM community, have seen similar trends given the amount of continued growth in @dtube and @vimm for video streaming and sharing. Next, they have also seen a demand for basic payment features among their applications. This is very encouraging as #STEEM is built on a cryptocurrency platform that facilitates this in its foundation. They have also started to signal that they may be reaching a saturation point in developed countries. This would be a problem for a centralized platform that depends on user growth to attract advertisers (clients); #STEEM continues to be a young social ecosystem that has the ability to take users from these saturated and established centralized platform for its future growth. Given the similarities of how the #STEEM community are developing DApps to attend these trends here, the potential to disrupt Facebook and other platforms is great!
Facebook was also very cautious to the various challenges they have experienced given the security issues they have recently experienced. While they have stated they have made adequate changes to secure user privacy and data, they admit that there is more to do. In fact, they are saying that their investments in Capital Expenditures to support these efforts will outpace the growth of revenue which has led to concerns of future profit margins as revenue growth is slowing down. While they also said that security measures have been corrected, they were also hesitant to say of any potential future impact due to both regulatory and user concerns of private data use. Expenses were up 53% mainly led by full-time employee growth of 45%. This impacted margins although they remain strong from industry standards.
Another interesting mention for me was the reference to the importance of mobile as a part of the business model. I remember when Facebook was first publicly traded, stock prices remained depressed for months given the lack of their ability to monetize their content. At some point in between, Facebook launched their mobile application which along side the smartphone adoption rate, exponentially increased their daily active user base. Mobile now represents over 90% of revenue! Given the importance of mobility in ours lives, this demonstrates how integral mobility is to social engagement. I think that the future of the #STEEM ecosystem will also rely on the ability for developers to create great user interfaces and experiences for the community to engage more seamlessly.
The last consideration I want to bring to your attention is how Mark Zuckerberg is viewing the future of social engagement online:
”The basic story that we’ve seen within the Facebook app is, over the last few years, the amount of time that people were spending in the app was increasing primarily because people were consuming more public content, like passive video consumption and news. But it was coming at the expense of people interacting with each other as much. So interactions were down. And we got a lot of feedback from people saying that’s not what they wanted.”
I found this interesting to consider as build our ecosystem into the future. Projects like @steemmonsters and @steemhunt have this type of engagement in mind as they continue to develop for the communities they engage. How can we continue to promote this type of engagement so that we can interact with each other rather than having a create and consume economy? We should try to focus on this area as it should results in improved retention as users remain engage to build upon relationships created and not simply to consume content. Given that Facebook has themselves admitted to saturation for user growth, now could be the time for adoption towards decentralized alternatives that provide the value to the users and not third parties.
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If only more people on Facebook knew of the possibilities here on Steem it could change the story!
Posted using Partiko iOS
That is up to us! We can make a difference when they are ready...
Great perspective...it will be awesome to see Steem become more mainstream, but we are years away....are you buying more steem on the way down or waiting for proof that price wants to go higher?
Agreed, still many things to make the user experience much better. I could not resist not buying yesterday. I had changed to monthly purchases but have two this month already. I will at least continue my monthly purchases until my cost average goes below $1 and reconsider from there.
The dysfunction of social media could be even bigger.security
and social problems etc.