Tech

Shira Ovide is a Bloomberg Gadfly columnist covering technology. She previously was a reporter for the Wall Street Journal.

In what feels like a harbinger of the apocalypse, a man this week used Twitter's Periscope smartphone app to broadcast live video of his drunken vehicular amble through Long Island, police said.

While those who obsess about technology have been busy proclaiming 2016 the Year of Virtual Reality, or the Year of the Great Unicorn Die-Off, this Long Island man unwittingly bested the tech pundits with the real theme of 2016: This is the year when tech companies go gaga for live Web video. 

Facebook has been pushing a strategy it deployed to the masses three months ago for people to share video of Timmy's soccer game in real time or to spend 45 minutes in the morning with Martha Stewart learning how to start plant seeds indoors. The company has been dangling cash at celebrities to make live videos and trumpeting how political candidates are using live Facebook videos to promote themselves to voters. 

Facebook executives can't stop talking about their new love. They used the word "video" or a variant 35 times in a January conference call to discuss financial results. That's more than executives mentioned Instagram (24 times) or the company's new virtual reality gadget, Oculus (9 times).

From Boob Tube to YouTube
U.S. adults are spending a growing amount of time watching Web videos, while time spent watching TV has flatlined.
Source: eMarketer, April 2015 research

Twitter CEO Jack Dorsey has made the Periscope app, which it acquired a year ago, a centerpiece of his revival strategy. Amazon said on Tuesday that it would introduce its first live daily Web video show, which sounds like a mix of QVC and "The Today Show." Amazon and Facebook are also among the tech companies chasing after the rights to show National Football League games live on the Web. The granddaddy of Web video, YouTube, is no neophyte in live video, but last year it changed the system to make it easier for the hoi polloi to film live Webcasts.   

What gives? Technology companies have fallen in love with the money-making potential of video ads. Live Web video is similar to regular TV, which is an advertising gold mine. And people for now are glued to their digital screens. Ustream, a live video technology acquired by IBM in January, says people spend two to three times as much time watching videos of an activity as it is taking place rather than after the fact. Smartphones have also made it easier to shoot videos live and share them without delay.

 The live video infatuation also feels like ripples of the popularity of Snapchat, which has found big success with a "Live" feature that compiles video snippets from bystanders and participants at events like the Kentucky Derby or the final day of Fashion Week in Paris. 

Yet there are huge risks in live video, both for consumers and the companies. For one, there's the fatigue problem. The 150th time someone livestreams Englishmen navigating around a pond-sized puddle, the whole real-time video thing starts to lose its novelty.  

On the creation side, burnout has already claimed one casualty. Meerkat -- the hottest tech company for about 48 hours in late March 2015 -- gave up on its live video strategy, in part because people weren't that excited about consistently broadcasting themselves or their surroundings, according to a Re/code report. It took less than a year for Meerkat users to go from,"Oh, live video from my phone is so cool!" to wipeout. (It didn't help that Facebook and Twitter had the heft to crowd out Meerkat.)

Facebook hasn't yet tried to make money from live videos; an executive said last week that the company was devoting resources to live video to make it useful and that it would figure out money-making ideas if live video catches on. The costs are being racked up now.

Facebook forecast that it would spend $4 billion to $4.5 billion this year on data centers and other capital spending projects, or more than six times its comparable tab in 2011. Expanding Facebook is expensive all around, but live video is particularly taxing on computing resources to store digital files and move them around. For consumers, live video costs them time and smartphone data. Broadcasting video from phones can quickly eat into mobile data limits

Video is the window into our lives, and it's great to have more technology to share it. But as a money-making venture, it appears to be a prospect with well-defined costs and a fuzzy potential payoff. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. The mentions were nearly all about Facebook's existing nonlive video and video ads, which are a huge hit. The investor discussion does give a sense of how important video is to Facebook's business strategy. 

  2. Recommended: Check out this livestream of adorable baby eagles.

  3. Of course, there were predictions a decade ago that people would tire of YouTube videos of dogs riding skateboards. We still love watching dogs ride skateboards. 

To contact the author of this story:
Shira Ovide in New York at sovide@bloomberg.net

To contact the editor responsible for this story:
Daniel Niemi at dniemi1@bloomberg.net