Facebook reiterates mobile risks in IPO filing
As social networking giant prepares to go public, it chases elusive mobile revenues with new app store
Published: 10 May, 2012
Facebook executives are on the IPO roadshow, drumming up investor interest in a transaction which values the social media firm at $96bn. However, uncertainties over the mobile profit model have been a repeated fly in the ointment, and the company this week amended its S-1 filing with the SEC to emphasize these risks.
The new filing details how the shift of social networkers from PCs to mobile devices, while it may create opportunities, is currently a negative, reducing what Facebook can charge for adverts and so threatening its key revenue stream in the longer term. Facebook has already said that it has not yet found a significant way to monetize its huge mobile user base, about 488m monthly average unique users as of March.
In the expanded S-1 document, the company says, under 'risk factors': "We believe this increased usage of Facebook on mobile devices has contributed to the recent trend of our daily active users (DAUs) increasing more rapidly than the increase in the number of ads delivered. If users increasingly access Facebook mobile products as a substitute for access through personal computers, and if we are unable to successfully implement monetization strategies for our mobile users, or if we incur excessive expenses in this effort, our financial performance and ability to grow revenue would be negatively affected."
The company has been taking some initiatives to generate mobile revenues, such as the new 'sponsored stories' within mobile news feeds, but it has stressed that it will be cautious about any new features which would alienate users. Its wider mobile vision relies on trying to create a full apps, content and unified messaging platform around its core service, in order to generate revenues beyond its basic advertising model, and increase its overall impact. This will also be important to fend off potential challenges from rivals with existing mobile platforms, such as Google and Apple.
This week saw Facebook making one step in that direction, launching its own app store. This will provide easy access to social apps on its platform, and will integrate simplified discovery and its payment options. The App Center will go live in the coming weeks via iOS and Android Facebook apps and on the web. All canvas, mobile and web apps that follow the firm's guidelines can be listed. The aim is not to achieve the massive apps base of Apple, but to encourage mobile developers to use Facebook APIs - examples being Pinterest, Draw Something and Viddy. If the apps discovered via the new Center need to be installed, consumers will still be directed to App Store or Google Play.
Facebook said on its blog: "Many developers have been successful with in-app purchases, but to support more types of apps on Facebook.com, we will give developers the option to offer paid apps. This is a simple-to-implement payment feature that lets people pay a flat fee to use an app on Facebook.com."