This week’s Facebook Developer Conference taking place in San Jose offers a clear insight into where the company is going and some of it makes interesting reading for retailers. We have already seen its chat bot payment announcement with Mastercard, but what else should retailers be looking at? Richard Windsor, analyst at Edison Investment Research, offers his view.
Progression, but little excitement. While Facebook’s announcements at its developer conference were not exactly ground-breaking, it is clear that Facebook remains extremely commercial and is very focused on fixing its weaknesses.
Highlights from F8 include:
- First augmented reality: Facebook has decided to re-focus on AR in what looks like a pre-emptive strike against Snapchat. This includes the launch of a new camera platform that follows up on the roll-out of camera capability to all of its apps. With the camera capability now everywhere, developers will now be able to create content that can overlay the real world as seen through a smartphone camera. This includes Snapchat-like photo and video annotations as well as combining the ability to map a 3D environment and place virtual objects within it. The aim here is to get users to spend more time within the Facebook ecosystem thereby increasing potential for monetisation.
- Second: Artificial Intelligence. This remains a major weakness for Facebook but it does appear to have made some progress in image recognition. This makes some sense as the core competencies of its biggest AI hires are in this area. Facebook showed AI that was capable of advanced object recognition as well as the tracking of moving objects through video. This was complimented by progress on making Facebook M (digital assistant) smarter as well as improving the quality of the bots that it offers to companies to communicate with their clients. AI remains essential to Facebook’s long-term growth as it is sitting upon a mountain of data but still is not in a position to really make the most of the insights and automation that it can provide.
- Third: Gaming. A lot of progress has been made in developing game play within Messenger. Rich game play is now enabled with real time and turn by turn games making up the majority of the line-up. There are now 45 games available for play within Messenger and with the gaming tab be enabled within the app imminently. We think that this is a crucial step forward as gaming remains the largest segment of Digital Life and in developed markets, there is still no dominant player.
- Fourth Chat extensions: This enables developers to bring their services directly into chat sessions. Spotify is the best example where users can search Spotify for a track and then post that track as well as play a sample all within the chat. Apple Music will also be coming to the platform later in 2017.
- Fifth Monetisation: Behind all of the new announcements is a single-minded determination to drive more traffic onto the platform. This can be seen everywhere from the desire to enrich mundane events to encourage sharing to enticing users to spend more time on the platform. Data richness and time spent are two key elements when it comes to understanding user activity and being able to earn revenues from it. This is not a subject that was directly addressed anywhere but one can see the hand of the cash register in everything that Facebook does.
Facebook revealed nothing that was really ground breaking but instead spent time addressing its weaknesses as well as ensuring that rivals are not able to steal its user engagement. We are still quite cautious with regards to Facebook’s outlook for this year as we do not think that either its video offering or its gaming offering are mature enough to bring the company back to high growth in 2017. This combined with requirement to really improve its AI to compete on a level playing field with Google, Microsoft, Apple and Amazon leads us to still prefer Baidu, Tencent and Microsoft.”
