On Thursday morning, Twitter will usher in its second-quarter earnings results. The big question on our minds: Will the social network’s live content gambit finally pay off?
Over the past year, Twitter has aggressively built up its roster of live content, inking deals with the NFL, MLB, BuzzFeed, and a slew of other outlets and organizations. Bloomberg and Twitter are even teaming up to produce news programming that will stream live 24/7. As Fast Company‘s Harry McCracken wrote last year, investing in live video is an attempt to both boost Twitter’s dwindling user growth and alter the perception of it.
From a user perspective, video may seem like an odd investment for Twitter, which has long been a text-centric platform and not necessarily where people seek out rich media in the same way they do on Facebook or Instagram. Where Twitter does fit in, however, is at the intersection of live video and commentary–something that has been happening organically for years. (Just ask Shonda Rhimes.) That, coupled with the millennial penchant for cord-cutting, makes it perfectly clear why Twitter wants to pair live video with real-time discussion, make it mobile friendly, and use it to hook in new users.
At the very least, shareholders seem optimistic that live streaming might unlock monetization opportunities for Twitter. (In fact, the bulk of Twitter’s ad revenue comes from video ads rather than text-based ads.) Last month, Twitter’s stock jumped more than 6% after a note by the analysts at equity research firm Cleveland Research indicated that the company’s advertisers were emboldened by its live video push and user growth. Even Steve Ballmer, a shareholder who previously expressed ambivalence over his investment, vouched for Twitter, calling it a “very good asset.”
Twitter’s stock has actually been on an upward trend since its last earnings report in April, when it boasted nine million new users–the biggest upswing in user growth that Twitter had seen in years. The company has since shared more good news, appointing a new CFO and announcing cofounder Biz Stone’s return. Twitter COO Anthony Noto attributed the increase to “resurrected users” who had returned to Twitter to follow political news, as well as people who were consuming live video on Twitter. During the first quarter, Twitter streamed 800 hours of live video, drawing 45 million viewers.
But a Morgan Stanley report from last week warned that its stock pop–which has persisted into July–shouldn’t lull shareholders into a false sense of security, noting that “we have not heard of any material change in advertiser intent to spend in the near term.” So are advertisers really buying what Twitter is selling? We’ll have to wait and see what Twitter has to say about all this on Thursday morning. Stay tuned!