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Is Twitter Preparing To Take On YouTube And Twitch?

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Is Twitter Preparing To Take On YouTube And Twitch?

Twitter (NYSE: TWTR) has become a cornerstone for many to stay informed about the news and events of the world. Founded in 2006, it has been on a long journey towards monetization, finally turning a profit for the first time in 2018. Today, monetization remains one of the key performance indicators when it comes to earnings season. They reported 199 million monetizable daily active users (mDAUs) vs a forecast of 200 million in their most recent earnings report. Not a bad miss which represents 20% YoY growth. However, as the market doesn’t seem to favor anything growth or speculative at the moment, the stock was sold off bringing it not far from its IPO price of $44.90.

The stock sits at around $52 at the time of this article.

Quite often, people are bearish about the prospects of Twitter, possibly due to its struggles with profitability and its poor track record of trying to grow its revenue through notable acquisitions such as Vine and Periscope.

Twitter recently launched their newest feature, Tip Jar, which allows Twitter users to donate to their favorite accounts - following in the footsteps of many other platforms in giving users and creators the power to monetize their online presence. When comparing Twitter to other consumer websites such as YouTube, Twitch or Facebook, a tweet is limited to 280 characters. Tweets are reduced in their options to engage with an audience as much in a video format and generate fewer donations in comparison. 

Tip Jar is not alone, it has launched alongside Twitter Spaces, a feature to compete with Clubhouse, which allows for a user to create audio-only virtual rooms. Twitter Spaces has gone further and allows users to charge tickets for their private shows, like in the release of a new album or a paid podcast. 

This changes things for Twitter and gives creators a new medium on a very popular social network to interact with their audiences. If we combine Tip Jar with Spaces, a creator now has the potential to generate income from their followings which will undoubtedly draw creators from other platforms who wish to run Spaces alongside their YouTube (NASDAQ: GOOGL), Twitch, or Facebook (NASDAQ:FB) channels.  

Pic source: (https://blog.twitter.com/en_us/topics/product/2021/spaces-is-here.html)

As time goes by, we continue to see these Big Tech companies innovate their own products with their competition’s models of success. YouTube is a perfect example, having adapted its own product to allow creators to have paid subscriptions to their channels. Additionally, they added Super Chats, which work similarly to Twitch Bits and allow for users to have their chats pinned to the chatrooms and also appear on the screen. 

So, what’s next for Twitter? Well, there have been rumors that they were looking to launch a paid subscription model themselves. This looks increasingly likely with the recent launch of Twitter Spaces and Tip Jar. These tools could allow creators to develop their followings on Twitter, which will in turn begin to monetize more users. We know that the monetization of its users is important for Twitter and it is a KPI that they continue to monitor from quarter to quarter. Launching paid subscriptions allow for Twitter to expand beyond a simple social network site into a live streaming service. This medium will also allow them to increase their advertising network and allow brands to pay for advertising across these Spaces. Subscriptions will provide users the ability to earn enough to consider creating content full-time, continue to build their audiences, and ultimately, generate more income for both themselves and Twitter.

This does rely on Twitter Spaces being successful and I am optimistic it will be. Clubhouse has taken off and already Facebook, Twitter, Discord, Reddit, Spotify, Slack, and Telegram have started developing their own platforms for this type of content. This does create competition for Twitter so it will be important for Twitter to stay competitive. What about if it decided to grow to allow Twitter Spaces to include video? What if Twitter signed a few deals to get some exclusive streamers on Twitter Spaces? I decided to look further into their press releases and picked out quite a notable point (see below). 

Twitter has a roadmap and knows where they want to take Spaces. But, where will it take the stock price? I am keeping an eye on Twitter’s price movement for an entry point. 

Pic source: (https://blog.twitter.com/en_us/topics/product/2021/spaces-is-here.html)

Photo Via Unsplash

 

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