Two technology titans, Facebook Inc. (NASDAQ: FB) and Apple Inc. (NASDAQ: AAPL), are reportedly working on a video streaming app to TV set-top boxes like Apple TV. If the report is true, it should be no surprise.
Facebook has devoted significant time and resources into becoming a “video-first” company. The reason is simple: money. Putting the social media on the big screen in living rooms around the world could shave serious advertising dollars from traditional TV content providers like, say, the Walt Disney Co. (NYSE: DIS), CBS Corp. (NYSE: CBS) and Comcast Corp. (NASDAQ: CMCSA).
The other sector that could get seriously stung by a tie-up between Apple and Facebook is the telecom industry, where Verizon Communications Inc. (NYSE: VZ) and AT&T Inc. (NYSE: T) have made large investments in content and undoubtedly have been planning more.
Facebook’s problem, of course, is that it needs more content than its current users can provide. Just putting a person’s Facebook page on a big screen in the living room is not going to be enough to attract either users or advertisers. The short-form videos Facebook now offers are not likely to do the trick either.
That means Facebook or Apple or both will have to either license or create more content. If the entertainment industry has learned anything since Steve Jobs talked the music industry into letting him sell single songs for a buck, it should have been that it’s not that hard for a sufficiently good technology to cannibalize an industry model that has worked for a long time.
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