The Second Coming Of Facebook

Beyond the post-IPO gloom lurks unchanged potential for greatness.

Rob Hewson

May 30, 2012

6 Min Read
Network Computing logo

 7 Examples: Put Gamification To Work

7 Examples: Put Gamification To Work

7 Examples: Put Gamification To Work (click image for larger view and for slideshow)

Facebook's eye-watering IPO has raised some awkward questions for the future of social networking. The record breaking $100 billion valuation was greeted with skepticism from some quarters, which will only have heightened in the wake of a less than stellar trading performance.

Investors and analysts are nervous. Facebook may have almost 900 million users, but the company only makes an average of $5 profit from each of them per year. Finding ways to increase that figure without alienating people is an urgent task.

Cynics might even suggest that Mark Zuckerberg and company are cashing in now precisely because future growth is uncertain, but let's not forget we're talking about a man on a publicly stated mission to change the world, for whom wealth seems to be only a secondary concern.

[ Can Facebook cash in? See Facebook's Advertising Problem. ]

For the moment, Zuckerberg is pointing to mobile platforms as a means of increasing profitability. In order to stay relevant Facebook knows it must follow its users as they migrate to smartphones and tablets. What's not clear is how the company plans to increase the effectiveness of the adverts, which provide the bulk of its revenue on devices with smaller screens. Still, a mobile centric strategy is one that investors can at least understand and appreciate. Mobile is today's hot ticket, and Facebook needs to be there.

But what about tomorrows hot ticket? Many observers are beginning to point to a new platform on the horizon--the smart TV--and Facebook must to do a better job of preparing for it than it managed with smartphones and tablets.

Manufacturers like Samsung are already offering smart TV sets that include online apps along with voice and gesture control. Microsoft has also made moves into this arena by positioning its Xbox games console as a set-top box with Kinect providing the smart interface. A next generation Xbox console, rumored to arrive in late 2013, will no doubt offer more advanced smart TV functionality.

Perhaps most ominous of all, Apple's next big venture is rumored to be a smart TV product, and if there's one company with the pedigree to smash open a blossoming market it's Apple. Just look at iPhone and iPad for evidence of that.

However, it would be more than a little premature for Facebook to highlight smart TV as a driver of growth right now. After all we're talking about a platform that hasn't really arrived yet. Smart TV is still an embryonic concept in the equivalent of the pre-iPhone era of the smart phone market or pre-iPad for tablets. Once again it may not be until Apple shows its hand that the smart TV truly enters most people's consciousness.

Zuckerberg and his colleagues will be more than aware of its imminent arrival and behind the scenes Facebook must surely be preparing for a smart TV revolution.

Facebook's History: From Dorm To IPO Darling

Facebook's History: From Dorm To IPO Darling

Facebook's History: From Dorm To IPO Darling(click image for larger view and for slideshow)

The television is an inherently social device anyway. Of all the screens people spend time with, it's the only one that naturally accommodates multiple simultaneous users, and it remains the primary device for consuming entertainment. A smart TV would also provide a much larger screen than competing devices and arguably the biggest potential for socially connected advertising, as Microsoft's NUads (Natural User Interface Ads) are beginning to demonstrate. People are accustomed to adverts on their TVs, so it may prove fertile ground for Facebook to push for greater ad exposure.

Smart TV could also address one of the biggest ironies of social networking today; that it flows between devices that are most comfortably operated by individuals. If I want to share the fun with people who are actually in the same room as me, I have to pass them my iPhone, hold up my laptop, or wait for each of them to locate the item of interest via their own devices, completely eliminating the joy of simultaneous appreciation.

In contrast, simultaneous appreciation has always been part of the magic of TV, and in terms of augmenting and facilitating real-world social interactions TV beats all the other devices hands down.

For Facebook, one of the most tantalizing possibilities could be a huge expansion of socially driven content. Today, users who connect their Spotify accounts with Facebook can share their music in real time, inviting others to listen simultaneously and make comments. On a smart TV, users could discover and share not just music, but documentaries, TV series, games, and movies via an integrated Facebook ticker or news feed, right on the platform through which we all consume the majority of our entertainment.

Live TV could also benefit from social connectivity. People already post reactions to major sporting events on their Facebook profiles, but they have to use a different device to do it. On a smart TV, sports fans could watch and react to friend's comments as they scroll across the bottom of the screen, or even maintain a Skype connection with their Facebook friends to celebrate every goal, touchdown and slam-dunk together.

In short, if Facebook can position itself as the mediator of TV content, then broadcasters and brands will be tripping over themselves to work with them.

It's all too easy to take the negative stance and predict the downfall of Facebook in the wake of its IPO performance, especially when no clear path to increased profitability has yet been revealed. However, as David Whighton wrote in the London Times: "The truth is that in a few years time, Facebook will probably be worth much more than it is now, or much less. And, frankly, nobody has much idea which."

When considering Facebook's potential, we should not limit our analysis to our current understanding of the social network, or even the announced plans to target mobile. Mark Zuckerberg is a forward thinker, and a man with an unshakable belief that social networking can transform the world. We should be looking, as he will be, at the opportunities and the platforms that are further down the track, that way we might just glimpse the seeds he's planting for a second coming of the social network.

At the Big Data Analytics interactive InformationWeek Virtual Event, experts and solution providers will offer detailed insight into how to put big data to use in ad hoc analyses, what-if scenario planning, customer sentiment analysis, and the building of highly accurate data models to drive better predictions about fraud, risk, and customer behavior. It happens June 28.

About the Author(s)

Stay informed! Sign up to get expert advice and insight delivered direct to your inbox

You May Also Like

More Insights