If Facebook, the social Web phenomenon, needed any more popularity, it got it through the Oscar-nominated movie, The Social Network. Based on the controversy surrounding Facebook’s founders, which arose from the claim that the concept was a rip-off of another social networking idea, Harvard Connection, the movie received eight Academy Award nominations, including one for best picture. The movie went on to win three Oscars, including one for best adapted screenplay. Meanwhile, Facebook has continued to grow and now has 600 million registered users. To ensure that these users remain engaged, the company is evaluating new models.
Facebook’s Growing Numbers
As of earlier this year, Facebook recorded close to 600 million registered users worldwide, with the United States leading with more than 146.5 million users. Last November, comScore named Facebook the third-largest Internet property in the world with an estimated 648 million unique visitors in November 2010, surpassing Yahoo!’s 630 million visitors. Google remained the world’s most visited website with 970 million unique visitors, followed by Microsoft with 869 million unique visitors. Here is a graph, courtesy of TechCrunch, showing Facebook going past Yahoo!:
The growing user base is also pushing up Facebook’s market valuations. Recently, General Atlantic bought a tenth of the company’s stock at a valuation of $65 billion.
Facebook’s Foray into Video
comScore reported that 171 million U.S. Internet users watched online video content with an average of 14.5 minutes per viewer in January. Facebook was the sixth-largest online video content property with 42 million unique viewers averaging 15.4 minutes in January. Facebook recently began experimenting with online movie rentals to compete with media streaming giants Netflix and Hulu. As of this week, Facebook users can rent Warner Brothers’ The Dark Knight for 48 hours in exchange for either 30 Facebook credits or $3. Facebook is expected to keep their 30% share for the service. As of now, there isn’t any agreement with Warner Brothers, and the movie rental service is similar to any third-party app. The commercial arrangement is the same as with iTunes.
For now, The Dark Knight is Facebook’s only offering and is not likely to be able to compete with Netflix’s streaming collection of 20,000 titles. But Facebook has a much larger subscriber base than Netflix’s 27 million and is looking at adding more titles to this service to soon let users rent or buy out titles.
Besides video rentals, Facebook is also in discussions with Skype to enable video calling. Last year, Facebook entered into an agreement with Skype enabling Skype users to connect with Facebook friends through voice calls and SMS. The two are rumored to be working to upgrade the voice calling function to a video calling function. If released, the feature will let Facebook compete with Apple’s FaceTime and Google’s Web calling feature.
Facebook’s Mobile Focus
Facebook continued with its acquisition spree and recently acquired group messaging service, Beluga. Beluga’s free app supports both iOS and Android devices and lets users send text messages, photos, and locations. Analysts expect location-based functionality to complement Facebook’s Places feature. According to market reports, 6.1 trillion mobile messages were sent last year, and the number is expected to cross 10 trillion in 2013. Through the acquisition, Facebook will be able to address this booming market.
Keeping its focus on mobile, earlier this year Facebook acquired Rel8tion, a Seattle-based mobile advertising services provider. The acquisition will help Facebook to improve hyper-local ads targeting its 200 million mobile subscribers. The mobile ad segment saw bigger acquisitions last year with Google acquiring AdMob for over $750 million and Apple acquiring Quattro Wireless for $275 million. Recently, AdMob reported over 2 billion ad requests a day. According to BIA/Kelsey, U.S. mobile local advertising is expected to increase from $213 million in 2009 to $2.03 billion in 2014, and Facebook is getting ready to address this market.
As I mentioned earlier, Facebook knows how to retain users. The company is venturing into additional business segments to garner more revenues and keep these users engaged. But it remains to be seen if these experiments are good enough to justify its $50 billion–$65 billion valuations.