The social media giant is in talks with HBO, Showtime, and Starz about adding streaming video. Facebook would offer subscriptions to these channels which users would watch within the Facebook platform. It the deal consummates, Facebook would likely have to shell out money in advance to the streamers and then make its money back with a piece of each subscription sold. Apple and Amazon take a reported 15-30% cut of its subscription fees.
It’s a logical growth step for the social media company. CEO Mark Zuckerberg has said all along that video is the future for Facebook. It already gets 8 billion daily video views, primarily from user generated content. It makes money with targeted advertising around the content, but not by selling access to the content itself.
No doubt Zuckerberg has watched Amazon Prime’s growth in the video arena. They are taking in some $2 billion in subscription revenue from its 26 million video users. Amazon just recently added NBA League Pass to its offerings, on a subscription basis, and targeting cable cord cutters more every day. Amazon also disclosed it is spending some $5 billion a year on content.