Facebook tests a new way to show video – and make money from it

Facebook is preparing a new way to show videos on the social network and opening the door to a new source of advertising revenue at the same time.

The new feature, called Suggested Videos, will roll out first on iOS in the coming weeks and probably will come to other platforms like Android and the Web in the next few months.

It works like this: When users click on a video in their News Feed, a new area pops up with related videos from Facebook partners that users can also watch. Some of those videos will be advertisements, and when a user watches one of them, Facebook will share the advertising dollars with the other partners supplying the video.

If a user taps on a video of a basketball game recorded by a friend, for instance, the Suggested Videos feed might contain videos from the NBA along with advertisements. If the user watches an ad, Facebook will split the revenue from that advertisement with the NBA.

The rollout, which Facebook is calling a test, comes as the social network moves to make video a larger component of its site in an effort to compete against YouTube and attract video advertisers. Facebook CEO Mark Zuckerberg has said that, several years from now, Facebook will be mostly video.

In addition to the NBA, Fox Sports, Funny or Die and Tastemade, a food and travel video network, are among the initial set of a few dozen video content partners, a Facebook spokeswoman said.

The rollout of Suggested Videos will mark the first time Facebook shares ad revenue with video partners. This could eventually draw more video creators to Facebook and away from YouTube, and make the social network a more popular destination for video. But Facebook has a lot of catching up to do against YouTube, which has shared ad revenue with partners for some time now.

Facebook might argue it has the algorithmic know-how to show just the right videos to its 1.44 billion users. This week, the company said it would be taking into account more user actions in deciding which sorts of videos to show people, like when users make the video full screen or enable high definition.

In 2013, Facebook began making videos shared natively on the site play automatically, whether they’re posted by end users or advertisers. This past April, the company reported it was generating four billion daily “video views”, which it defines as a video watched for three seconds or more.