Facebook's revenue hit despite a surge in usage across platforms amid Covid-19

Hemani Sheth Mumbai | Updated on March 25, 2020 Published on March 25, 2020

Social media giant Facebook has witnessed a dip in revenue, despite a major increase in usage and time spent across its social media platforms in light of the global coronavirus pandemic.

Alex Schultz, VP of Analytics, and Jay Parikh, VP of Engineering detailed the impact of the Covid-19 pandemic on Facebook’s apps and services in an official blog post on Tuesday.

According to the post, the social media giant has seen a major surge in usage particularly in countries that are hit hardest by the virus. Total messaging in these regions has increased by more than 50 per cent over the last month according to the post. Voice and video calls on Messenger and WhatsApp have more than doubled.

In Italy, the second country to have been impacted the worst by the pandemic. Facebook saw up to 70 per cent more usage across its apps since the crisis arrived in the country. Instagram and Facebook Live views have doubled in a week. Furthermore, there has been a messaging increase of over 50 per cent while time spent in group calling (calls with three or more participants) has increased by over 1,000 per cent during the last month, Schultz and Parikh said.

Ad revenue hit

Despite increased usage, Facebook’s ad revenue has been negatively impacted across the globe. While its messaging services are witnessing increased traffic, more people are using its feed and stories products to get updates from their family and friends.

“ Our business is being adversely affected like so many others around the world. We don’t monetize many of the services where we’re seeing increased engagement, and we’ve seen a weakening in our ads business in countries taking aggressive actions to reduce the spread of COVID-19,” Schultz and Parikh said.

Ensuring glitch-free services

They further elaborated that the company has been working on maintaining the quality of services which have been developed to withstand such spike in usage as it has witnessed before during events such as Olympics or New Year’s Eve.

“To help alleviate potential network congestion, we are temporarily reducing bit rates for videos on Facebook and Instagram in certain regions,” they further said.

In India, multiple digital players including Facebook have decided on temporarily defaulting HD and ultra-HD streaming to SD content or offering only SD content, at bit-rates no higher than 480p on cellular networks.

The move is in light of the 21-day nationwide lockdown announced by Prime Minister Narendra Modi to flatten the curve and limit the spread of the coronavirus pandemic in the country. The move will help in withstanding the quality of cellular networks amidst increased usage as more people work from home during the lockdown

These voluntary measures which will be in effect until April 14, had been decided at a virtual meeting organised on March 24 by representatives of major industry players including Facebook, Star & Disney India, Sony, Google, Viacom18, Amazon Prime Video, Zee, Tiktok, Netflix, MX Player and Hotstar, according to previous reports.

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Published on March 25, 2020
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