Twitter Ramps Up Premium Video Content
Twitter delivered 1,200 hours of live premium video content in the second quarter of 2017, and video advertising was the largest and fastest-growing advertising format in its portfolio. According to the company, video content delivered grew by a third in this quarter, up from 900 hours in Q1 2017, and from 600 hours in Q4 last year. And Twitter's live streaming app, Periscope, increased the number of hours streamed to 76 million for the quarter.
Twitter's premium coverage included 625 events, and reached 55 million viewers, growing more than a fifth from the previous quarter. Ad engagement increased by a whopping 95% over last year, with the company citing a shift towards video and higher click-through rates resulting from better targeting as the major drivers for this increase.
But revenue for the company dropped 5%, to $574 million, with advertising down 8%. Its quarterly (GAAP) net loss rose to $116 million, compared with $107 million in the same quarter last year even though revenue and adjusted earnings per share topped Wall Street forecasts.
The most worrying metric for Twitter Inc. in this quarter's earnings report was that it its monthly user base was flat for the quarter. That's a sharp slowdown from the 9 million new monthly users it added in the first quarter. Daily users rose 12% compared to the second quarter in 2016, but that's a slower growth rate than in the past.
The company did not have a clear explanation for the flattening of monthly users, suggesting that it might be due to seasonal factors or because Twitter had fewer events in the second quarter. Its shares dropped 9% in yesterday's trading.
Twitter management reiterated its strategic emphasis on video, with the company set to launch a live college sports channel, Stadium, later in 2017 and a news channel in collaboration with Bloomberg. This follows Facebook CEO Mark Zuckerberg's comments during his company's earnings call, where he said video was likely to be the leading business driver for his company in coming years. (See Video Bigger Business Driver Than Messenger – Zuckerberg.)
Twitter's focus on video is similar to that of Facebook and Snapchat, all of whom are now trying to use video not only via live streaming apps and user-generated content, but also for premium programming. According to reports earlier this month, all three are bidding "tens of millions" for highlights from next year's soccer World Cup in Russia.
These social networks are less interested in Netflix-like dramas, and more in bite-sized content that can be quickly viewed and is well suited to spurring social commentary and sharing. Mobile devices are also the first screen for usage of these apps, and so again, short clips, highlights and key footage are the formats likely to be successful.
Facebook is developing exclusive short-form series to fit its requirements, Snap is working with traditional media companies to create the right content for its platform and Twitter is live streaming sports and news footage. Sports coverage is seen as particularly important, as it drives mass engagement and fits bite-sized consumption and social interaction. Facebook has already struck a deal to carry Fox's coverage of the European soccer Champions League, while Snap Inc. has previously carried Olympics coverage and Twitter has streamed NFL games.
For operators, these are less likely to affect existing pay-TV services or even new services that are being developed like skinny bundles. However, all media competes for a viewer's time, and time spent viewing content on social networks takes away from time spent using the operator's service, and finding value in it.
The more direct impact will be on network capacity, as social network traffic increasingly shifts to video. While most series and original shows are less likely to cause massive, unpredictable spikes, sports events and live streamed clips could create sudden surges. Still, operators probably need to be more concerned about user-generated video content, as it is less predictable and with live streaming, will have a significant impact on the bandwidth-constrained upstream pipe.
— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation