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BofA analysts said in a note to clients Wednesday that the battle for short-form video (SFV) supremacy “could represent the largest shift in Internet usage over the next five years.”
They explained that all leading social media platforms, including YouTube (NASDAQ:GOOGL), Facebook (NASDAQ:META), and Instagram, are investing billions in their SFV platforms and aggressively ramping up content.
“In 2021, we estimate TikTok captured 2.9% of all U.S. Online time spent, and SFV as a whole was at 5.4%. While there is risk of SFV consumer fatigue, we estimate SFV could grow to 12% of all Internet time spent by 2024, with category share gains by YouTube Shorts and Reels (Meta),” they said.
They added that there is a more than $100 billion opportunity in the short-form video category.
“We think SFV can be monetized at par with other social content (but below professional video content), with known creators generating premiums. Assuming modest discount on CPMs to professional content, we estimate SFV revenue to reach $108bn by 2028 (~15% of Online media spend). TikTok has a monetization ramp ahead, which could be a 200bps headwind for competitor growth in ‘23. Following Google’s rev share announcement, we think platforms will eventually pay for exclusive content from top creators, which could be 5-10% gross margin headwind on SFV content vs social,” they continued.
Furthermore, the analysts believe it is a three-way battle between TikTok, Meta, and YouTube for SFV supremacy, stating they are “aggressively competing to be leaders in Western markets as each company brings strong assets to capture usage.”
