- Twitter is reportedly in talks with Apple to place the Twitter app on Apple TV.
- The move has more symbolic importance than financial, but it could be a game-changer.
- Can Twitter become the Netflix of live content streaming?
Shares of San Francisco, California-based micro-blogging service Twitter (NYSE:TWTR) have rallied strongly after an initial post earnings correction, piling on massive gains of over 32% since. With the initial gains coming on the back of buyout rumors, Twitter shares gained a substantial 6.7% in yesterday’s trading session, after reports of its talks with Apple (NASDAQ:AAPL) to be on Apple TV were all over the media. Why does Apple TV matter?
Does Apple TV Really Matter?
There’s no official word on this yet, but Twitter is reportedly in talks with Apple to bring the Twitter App to Apple TV. According to a report in March 2016, Apply TV only has about 23 million Monthly Active Users (MAUs) globally, implying that its audience is less than a 10th of Twitter's.
So, rather than the financial impact of being on Apple TV, the news is of significance for other reasons. For Twitter, the move likely signals an even larger shift towards live video streaming of sports, news and other events, which could significantly aid engagement levels on the platform.
Twitter, which has been working to bring a whole lot of live streaming content onto its platform has registered some important wins lately. For starters, Twitter outbid its significantly larger rival Facebook to bag rights to live stream 10 NFL games this season. Twitter reportedly spent $10 million to acquire streaming rights to the games which drew about 13 million viewers per game on average last year.
That's not all. Twitter has also signed a slew of other deals.
More recently in July 2016, Twitter inked a deal with Sky Sports to stream highlights and key moments like goals from the hugely popular English soccer championship, Premier League. Twitter will also be streaming out-of-market games from Major League Baseball (MLB) and the National Hockey League (NHL), both of which are very popular in the United States.
The micro-blogging platform has also signed a deal with the National Basketball Association (NBA), which will allow it to "broadcast original programming created exclusively for the social media company." While the deal does not include streaming of the actual games, it does include a host of other content which will be found only on Twitter, Vine and Periscope.
Twitter will also be live streaming a multi-sports highlights show called "The Rally", to be produced every night exclusively for the platform by 120 Sports, the Over The Top (OTT) network. After streaming the Wimbledon tennis finals, Twitter also recently streamed the Republican and Democratic national conventions, and is set to stream select Bloomberg Television programs.
Well, all of this is great news for Twitter. With the recent slew of deals spanning live streaming of sports, news and events, it appears as if Twitter is gearing up to transition into a video version of itself. For most users, Twitter is about live commentary and instant updates. Apart from connecting with celebrities, that's what a lot of Twitter users use the platform for. And if that can be delivered in video formats, Twitter should stand a better chance of luring and retaining millennials.
The fact that Twitter wants to be a part of Apple TV signals that this is going to be an ongoing effort for Twitter. On the surface, all of this is great news, and augurs well for Twitter's user engagement, and possibly even user growth.
There's a downside to streaming content, and everybody who follows Netflix is probably familiar with the problem. Content that's great for audiences and catches eyeballs also carries content costs for streaming services. In recent times, Netflix has found itself investing increasingly huge amounts of money in content, be it licensed, or produced in-house. Twitter is probably going to face a similar situation, and with the kind of losses it registers, scaling its live content streaming operations could turn out to be a tough ask.
What's more, Twitter might not really be in a great bargaining position, casting a doubt over how much money it could actually make. In the case of the NFL games for instance, Twitter managed to bag the deal because it was willing to "sell only a portion of the ad inventory exclusively." In contrast, Facebook "wanted to sell all the ads that would air during the football games, essentially cutting out the sales relationship between the N.F.L. and marketers". Twitter is still going to make some money from streaming the games, but the question is, how much will it make net of content costs and expenses?
Summing It Up
Twitter's interest in placing its app on Apple TV is more important because it's symbolic of a shift in Twitter's focus, rather than the Apple TV opportunity itself. Live streaming of sports, news and events seems to be the right direction for Twitter as it transitions into a videos-based version of itself. However, it remains to be seen how feasible such a transition will be financially. Twitter's focus on live streaming could boost engagement levels on the platform and possibly bring in new users. That said, it's still early days, and one would do well to wait before reading too much into it.