×

You know that new 'Watch' video tab on Facebook? Here's how the company will make money off it, analyst says

  • Morgan Stanley analyst Brian Nowak estimates that Facebook will make $565 million in revenue from the "Watch" tab video in 2018, on spending of $400 million.
  • That implies that each daily user in North American would spend about 20 minutes a day on the "Watch" tab videos.
Facebook CEO Mark Zuckerberg
Getty Images
Facebook CEO Mark Zuckerberg

Facebook users spend upwards of 50 minutes a day on the platform — and as long as at least 7 of those are in the new video tab, it's a good deal for the company, one analyst says.

Morgan Stanley analyst Brian Nowak estimates that Facebook will make $565 million in revenue from the "Watch" tab video in 2018, on video spending of $400 million. About $200 million of the spending would be on producing content Nowak wrote in a note released on Friday.

That implies that each daily user in North American would spend about 20 minutes a day on the "Watch" tab videos. The users would only need to watch about 7 minutes of video for Facebook to break even on its $200 million content investment, Nowak wrote.

According to Nowak's estimates and Neilsen data, users watch 40 minutes per day on YouTube (global average), 125 minutes a day on Netflix (U.S. average) and 260 minutes a day of traditional TV (U.S. average).

Facebook did not immediately respond to a request for comment.