September 29, 2020

Facebook Takes On Twitter With Video

That’s the maximum length of the videos on Vine, a mobile application owned by Twitter that has grown like one of those creeping plants, to close to 20 million users since it sprouted five months ago.

On Thursday, Facebook introduced its own short-video service, built into Instagram, the popular photo-sharing app that Facebook bought last year. The new feature allows users to record as much as 15 seconds of video, enhance it with image filters and post it immediately.

The move underscores how video has increasingly become critical to companies like Facebook, which is seeking ways to keep its 1.1 billion users entertained and engaged — particularly on their mobile devices. Video also represents a lucrative and fast-growing area of online advertising and is expected to top $4 billion this year across the industry, according to the research firm eMarketer.

“Sharing video is inherently mobile,” said Gene Munster, an analyst with Piper Jaffray. And Facebook needed to get into the game, he said, adding that it had to “check that box to remain relevant to their users.”

The simplicity of both apps — press your finger to the screen to record, lift it to stop and click to publish — makes it nearly as easy to share a video as it is to post a photograph.

And the form seems aptly suited to modern vanities and attention spans — people peek at their smartphones in line at the grocery store but may also feel moved to document the visit.

Vine has caught the fancy of everyone from the White House, which recently filmed President Obama pedaling a stationary water filtration bicycle, to marketers like Burberry, which this week compressed its entire runway show of men’s fashions into a six-second blur.

Kevin Systrom, a co-founder of Instagram, said his team had been considering adding video to the service for two years, but waited until it could be made “fast, simple and beautiful.”

“What we did to photos we just did for video,” Mr. Systrom said at a news conference at Facebook’s Silicon Valley headquarters on Thursday. Instagram has about 130 million users, according to the company.

Although neither Vine nor Facebook’s service is currently offering advertising, it would be easy to sprinkle a sponsor’s video ad into the legions of user-generated videos, much as Twitter and Facebook do now with text ads in their users’ feeds.

Jan Rezab, chief executive of the research firm Socialbakers, said that online viewers had a high tendency to engage with video ads, especially if they were deftly inserted into a stream of other content.

“You could actually monetize Vines and the Vine channel by introducing sponsored Vines. Every 10th Vine could be a sponsored Vine,” he said. Facebook could do something similar.

Currently, about one in 10 iPhone users in the United States has the Vine app, and more than a third of iPhone users have Instagram, according to the research firm Onavo Insights. If the short-video format proves to be more than a passing fad, a great deal of advertising revenue could be at stake. YouTube, Google’s longer-format video service, brings in billions of dollars a year in advertising.

Facebook already gets about 30 percent of its advertising revenue from mobile, according to its last quarterly earnings report.

Video holds a promise that goes beyond what static images and nuggets of text can offer. It tends to engage even the most distracted users, particularly when the snippets are easily digestible.

Vine-length videos are ideal when scrolling through a Twitter feed on a smartphone, Mr. Rezab said. Videos tend to be funny, and “you don’t have to hit the play button. The sound kicks in as you’re scrolling over it.”

“The six seconds is just magical,” Mr. Rezab said.

That sense of ease and simplicity was what the Vine team was striving for when it built the app, said Michael Sippey, Twitter’s vice president of product, in an interview.

“We wanted to make mobile video without a start or stop button,” he said. “If you give people simple tools to tell stories, they’ll tell really great stories.”

Some will be funny or trivial, but others will record momentous events, he said, like this week’s videos on Vine of the protests in Brazil.

The Instagram team sought much the same thing, although it added other features, like the ability to delete portions of a 15-second video and rerecord them. It also included an image stabilization feature to reduce the choppiness that often comes with hand-held recording.

Vindu Goel reported from Menlo Park and Jenna Wortham from New York.

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DealBook: Wall Street Transfixed by SAC Deadline

SAC Capital Advisors, in Stamford, Conn., was fielding requests for withdrawals from outside investors on Monday.Marilynn K. Yee/The New York TimesSAC Capital Advisors, in Stamford, Conn., was fielding requests for withdrawals from outside investors on Monday.

For most of the day Monday, a report about the investor exodus at the hedge fund SAC Capital Advisors was the most-viewed article on the Bloomberg data terminals that permeate Wall Street trading floors.

In part, the story’s cliffhanger element drove its popularity. How much money will SAC investors pull out by a withdrawal deadline that expired late Monday? Will its billionaire owner, Steven A. Cohen, buffeted by the wave of so-called redemptions, shut the fund to outside investors and manage only his fortune? Will the government bring additional criminal charges as the insider trading investigation of the firm intensifies?

But a major reason for the intense interest on Wall Street, senior brokerage firm officials say, is a commercial one: SAC has generated billions of dollars in revenues for brokerage firms over the years. Several executives — all citing client confidentiality — said that the prospect of a severely diminished SAC would hurt their bottom line, which has created fear and anxiety on trading desks across Wall Street.

“This is going to have a significant impact to the Street, full stop,” said a senior executive at a brokerage firm that counts SAC as one of its largest clients. “It’s like that line in ‘Bonfire of the Vanities’: a lot of golden little crumbs have fallen off of SAC, and now it looks like there will be less of them.”

SAC employees — and the armies of brokers and stock salesmen that service the firm — are expecting outside investors to take back several billion dollars more by Monday’s regularly scheduled quarterly deadline, according to people with direct knowledge of the firm. The Blackstone Group, SAC’s largest outside investor, is expected to withdraw most of its money; another fund, Ironwood Capital Management, will also terminate its relationship with the firm.

Hedge Fund Inquiry

Combined with the $1.7 billion that outside investors took out earlier this year, the withdrawals could leave SAC and Mr. Cohen with only about $1 billion of other people’s money. The fund could announce to its clients as soon as Tuesday the amount of money that investors asked to withdraw.

Investors are fleeing during the continuing government inquiry into insider trading at SAC. The firm, which had been giving investors regular updates on the investigation, recently told investors — after its senior executives received grand jury subpoenas — that it was no longer fully cooperating with the government and would not be providing further updates. That announcement heightened investors’ concerns, leading to an increase in withdrawal requests. At least nine former SAC employees have been tied to insider trading; four of them have pleaded guilty. Mr. Cohen has not been accused of any wrongdoing.

Given the substantial outflows, Mr. Cohen and SAC officials are discussing the possibility of returning all outside capital and transforming SAC into a “family office” that manages Mr. Cohen’s wealth, said people with knowledge of the firm’s thinking. Of the $15 billion that SAC managed at the beginning of the year, about $8 billion is Mr. Cohen’s, with about $1 billion more in employees’ money.

The loss of investors will cost SAC dearly and most likely will force it to reduce its staff of more than 1,000 employees. SAC, which is based in Stamford, Conn., pays for its large infrastructure by charging its investors some of the most expensive annual fees in the industry — as much as a 3 percent management fee and 50 percent of the profits. It commands those fees because of its nearly unparalleled investment track record, posting returns that have averaged nearly 30 percent a year over the last two decades.

While Mr. Cohen’s investors have benefited from the superior performance, so have the Wall Street brokerage firms that have catered to Mr. Cohen’s firm. The main reason, they say, boils down to one word: leverage. To juice its investment returns, SAC borrows heavily from banks, which earn big fees on the loans. The fund borrows, on average, about $3 for every dollar in the fund. At $15 billion managed, SAC had a staggering $45 billion in buying power.

People close to Mr. Cohen said that without outside investors, he would most likely run the business more conservatively and substantially reduce his borrowings.

SAC’s billions of dollars in buying power, combined with the fund’s aggressive trading style, have made it one of the top commission payers on Wall Street. Several executives said that the firm is a top trading client at most of the large banks, including Goldman Sachs and Morgan Stanley, paying out several hundred million dollars a year in stock trading commissions annually. The fund is also a highly profitable and important customer for the banks because it is among the most active buyers of the lucrative initial public offerings and secondary offerings that they underwrite.

“In these soft years for stocks, where margins have grown very thin, trading volume has become the lifeblood of the brokerage business,” said Matt Samelson, principal at Woodbine Associates, a capital markets consulting and research firm. “When you’ve got a major player like SAC either going away or downsizing, this just erodes the trading volume that the big Wall Street firms have been fighting so hard to get.”

Other areas of the large banks that generate big revenue from SAC are the so-called prime brokerage units, which provide a number of services to hedge funds, including lending money, clearing trades and introducing them to prospective investors. Most hedge funds use one or two prime brokers, but SAC has historically spread the wealth around, employing at least five, including Credit Suisse and JPMorgan Chase.

Wall Street officials note that despite the prospective loss in business, there are a number of silver linings. The impact of a diminished SAC would be buffered by the fact that Mr. Cohen would continue to manage billions of dollars. Another potential positive is that, should the fund reduce its head count, a number of leading SAC portfolio managers would be expected to start their own firms. The concern, however, was that their affiliation with SAC, whose reputation has been stained by the insider trading scandals, could hurt them in raising money.

A version of this article appeared in print on 06/04/2013, on page B1 of the NewYork edition with the headline: Wall Street Transfixed By an SAC Deadline.

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