Netflix and Facebook seem to share a crucial thesis about the future of TV shows

Both Facebook and Netflix are currently funding their video ambitions with a single revenue model (subscriptions or advertising) as opposed to the dual revenue model followed by broadcast/cable networks and other streaming competitors such as Hulu and YouTube.

Facebook believes that it can offer a revenue split with content creators that will incentivize them to produce quality video without a large upfront guarantee.

This is where the market dynamics of addressable advertising kick in. Let’s assume the following:
1) Addressable Video CPM $ (cost for 1,000 impressions) — $100
2) Non-Addressable Video CPM $ — $25
3) Revenue Share — 70% for publisher and 30% for Facebook

The Facebook portion of the CPM $ ($30) could be greater than what the publisher currently charges without targeting. This is solely due to advertisers willingness to pay more to reach the intended target.


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