Despite Facebook spending ~$1B last year on Watch, its would-be YouTube killer is a jumble of ads with no hit shows and a tiny slice of overall video revenue
Three long years ago, when the world knew little about Cambridge Analytica and laughed off the specter of fake news, Mark Zuckerberg had a very different kind of problem. Tweets: @simonowens Tweets: Simon Owens / @simonowens : Facebook Watch is proof that just because you throw a bunch of money at creating video content doesn't mean any of that content will be a hit. via @sarahfrier http://www.bloomberg.com/...
Context & Ripple Effects
Facebook entered original video at peak confidence: three years earlier Zuckerberg's platform was riding record growth — Q1 2018 alone brought $11.97B in quarterly revenue, up 49% — and Watch was pitched as the YouTube killer. The funding machine backed digital publishers and news shows, with programming steered toward sports, news, and star creators as publisher funding began drying up.
The Bloomberg accounting lands just as that experiment is visibly unwinding: Facebook has told news publishers it will renew only about a third of its funded news shows, and Nielsen's daytime streaming numbers show why the money bought no audience — YouTube dominates the daypart Watch needed to crack.
First-order effects
- Funded publishers and news producers face immediate revenue loss as Facebook renews only a fraction of existing Watch shows, stranding outlets that built teams around platform money.
- Facebook's ~$1B original-content bet fails on its own terms: no hit shows, a jumble of ads, and only a tiny slice of overall video revenue against YouTube's daytime streaming lead.
Second-order effects
- Watch pivots from originals toward cheaper talk shows and licensing — a strategy refinement that later ups the budget to $1.4B while abandoning the hit-chasing model (per The Information) — shifting spend from exclusives to inventory.
- YouTube faces less pressure to defend against a funded rival, freeing it to compete with Netflix instead — offering top creators multimillion-dollar incentives for time-limited exclusivity while penalizing simultaneous Netflix uploads.
Third-order effects
- Platform-funded content commissions prove structurally fragile: when distribution is rented rather than owned, publishers bear the layoff risk each time a platform retrenches, pushing the industry back toward ad-revenue share and licensing over upfront checks.
- Scale plus algorithmic distribution, not content budgets, decides video winners — a lesson that pushes would-be challengers away from buying libraries of shows and toward owning the viewing habit itself.
The trend: Big-platform original-video spending is collapsing into licensing and ad-share models, as Facebook's Watch retreat joins a broader pattern of funded-content experiments giving way to distribution-first strategies.