Twitter (TWTR, Financial) has been struggling to expand its user base and, as a result, its revenue growth has been a sad story. And when you start comparing it with Facebook’s (FB, Financial) growth, it looks downright ugly.
After playing catch-up with the rise of social media usage around the world, Twitter was late to jump on the video bandwagon. The company first announced its plan to enter the live streaming market early this year and announced a deal with CBS in July to live stream Republican and Democratic national conventions.
In an attempt to grow its user base, Twitter announced a new application for streaming live-video to Apple TV, Amazon Fire TV and Xbox One today. The app will be able to stream content from Twitter as well as Vine and Periscope. According to CNET, the live-streaming feed will begin tomorrow with the Buffalo Bills playing the New York Jets, the first of 10 NFL Thursday night games.
The deal with the NFL, which was announced in April, is part of a $10 million agreement between the NFL and Twitter. The streaming video will be accompanied by ads from Bank of America (BAC, Financial) and Budweiser (BUD, Financial), as well as running commentary on the game coming in as Tweets.
Tomorrow is a huge moment for Twitter and, if successful, will embolden the company to keep pushing further in that direction with other live sports feeds. But its rivals are not going to sit quietly and watch Twitter run away with this segment.
UPDATE Sep 18: Twitter's first live streaming of Thursday night's Jets Vs. Bills NFL game on Sep 15 had 243,000 viewers.
For the microblogging site, this is a question of how much engagement it can create within its user base. That engagement will hopefully entice older Twitter users to start using their accounts, which means more ad revenue in addition to active user growth.
This is not the only new initiative from Twitter. The company is actively soliciting creators of video content with an attractive cut of 70% of ad revenues. It’s much higher than what YouTube (GOOG, Financial) offers, or even Facebook for that matter. YouTube, of course, is the undisputed leader in user-generated video content and they have spent years nurturing their talent. As such, Twitter isn’t going to walk away with market share that easily. They will have to be patient and hope that their higher incentivization works over the long haul. This is especially true because Twitter is in the live video space that needs a real-time audience. Facebook is miles behind YouTube as well, but they’re counting on their already-high engagement levels for fresh video content to be added over time.
Unfortunately, Twitter may not have the time it needs to build a base of user-creators for its live video streaming initiative, which is why the NFL games, as well as events from Major League Baseball and the National Hockey League, are critical to their success at this point. And their partnerships with Apple (AAPL, Financial), Amazon (AMZN, Financial) and Microsoft (MSFT, Financial) are also part of this attempt to leverage everything they have to bet on live video.
Sometimes it is good to be the underdog, and Twitter is certainly the underdog in the video streaming world as of now. But will that change in the future? That’s what the company is betting heavily on.
Disclosure: I have no positions in any of the stocks mentioned above and no intention to initiate a position in the next 72 hours.
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