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A younger person using Facebook on a smartphone. Photo by: Pexels.com
A younger person using Facebook on a smartphone. Photo by: Pexels.com

The Double-Edged Sword Behind Original Content Development

The Wall Street Journal has reported that Facebook is in discussion with Hollywood producers to create original programming for their platform.

This move is another step by Facebook to expand their video and multimedia viewing options for their users. Recently the company has made a large push to get users engaged with Facebook Live. Browse over the Facebook Live Map to see where users are currently streaming around the globe.

Reuters reported that Facebook is planning on budgeting $3 million per episode.

In comparison to Amazon’s recent smash hit The Grand Tour with a budget close to $250 million for three seasons. Each season contains close to a dozen shows, and would be close to 36 episodes total. When one divides 250 by 36 the sum is 6.9 million per episode. That being said, here is what Forbes reported:

‘When Clarkson helmed the show at the BBC, it boasted a budget of some $556,000 (£450,000) an episode. Wilman, who is also the executive producer of The Grand Tour,  has said the new show’s production costs range between $1.2 million (£1 million) to $4.9 million (£4 million) an episode. Assuming an average show budget of $3.05 million an episode, that works out to over $36 million for the seasons, or some $109.8 million across the three promised seasons.’

The truth is usually somewhere between the two sources. Netflix’s Chief Content Officer Ted Sarandos went on record and said the show would cost close to $250 million. An executive producer of The Grand Tour said that each episode would average in between $1.2 and $4.9 million per episode. After calculating 12 episodes in three seasons with a total budget of $250 million, we found that the average cost of each episode is close to $6.9 million per episode.

Overall, it is possible that Facebook could made a series of shows with a budget close to $3 million per episode, but their business model of providing a free service would be put to the test.

Facebook has also been in recent talks with publishers about creating a subscription base model, or a paywall for users and the news-related pages on Facebook.

If the company were to decide to produce several multi-million dollar episodes of original content, I am sure they would want to find a way to monetize the programming. It could be possible that Facebook is more interested in selling streaming video as a platform to other companies, as well as trying and work in original programming to entice viewers to their platform.

Facebook’s stock continues to climb overall. I originally assumed that Snapchat would decrease the stock price, but Facebook continues to rebound and gain momentum in the stock market. It is trading down for the day, but has been in an upward trend for the past several months.

Watch over a YouTube video by TheStreet going over the recent news at Facebook.

Facebook's Move Into Original Content Shows Just How Saturated the Space Is