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Facebook Begins Testing Live Streaming Video Broadcasting

Celebrities and some journalists were able to use Facebook (FB) live streaming for several months now, but as of today, Facebook is opening up its book of features. At least in test/beta form. It appears the social media giant received its full share of beta testing. According to Allison Swope, Product Manager for Facebook, almost 800 million people are connected to public figures on Facebook, and interacting with them.

"Live lets you show the people you care about what you're seeing in real time -- whether you're visiting a new place, cooking your favorite recipe, or just want to share some thoughts" From a blog post by Vadim Lavrusik and Thai Tran, product managers at Facebook, 

Facebook Daily stock price chart with moving averages and trendlinesFacebook calls the new video feature "Live". And the video feeds are from the Facebook Mentions, a Facebook app.

Newscasters may have something to worry about. I can see the day when CNN (TWX) isn't the only place to get live footage of a car chase or hostage situation. ABC (ABC) CBS (CBS) Fox (FOXA) maybe have more to fear than they do already. If people are given more "channels" and there's bound to be newly minted Facebook "celebrities" coming soon, the traditional networks stand to see greater erosion from a once captive audience without video choices. You can see the handwriting on the wall, less revenue for the big networks adding to more margin erosion.

It remains to be seen if Facebook can monetize the video streaming and what impact it has on others including YouTube (GOOG). For the time being, it appears Android users are left outside as the service begins its wide rollout on iPhones and other Apple (AAPL) devices to start. To be fair, Facebook doesn't need to directly monetize the video content.

Instead, as long as the user engagement remains high and the site is able to maintain its "must visit" status with users, the other content and ad revenue can easily justify the additional costs of providing "Live". That doesn't mean I believe Facebook is a good investment, but I'm not bearish on the video stream.

Facebook's forward looking three digit price-to-earnings (P/E) ratio has me concerned. And as I expressed many times in the past, the concentration of ownership is an inescapable risk. The moment Zuckerberg becomes bored and decides to take some time off (for example, to spend more time with family), innovation may begin to slip behind the never-ending line of competitors that want to eat Facebook's lunch.

For the time being, the short interest is a paltry low 1.4% and without reason to climb at this time. While I don't care for high P/E's, there's no doubting that as long as the company remains in growth mode, the price can easily be justified.

 

 

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