Can Live Streaming On Twitter Increase User Engagement On Its Platform?
In an attempt to make live video broadcasting by users easier on its platform, Twitter (NYSE:TWTR) will now allow live streaming directly through its app as it incorporates the Periscope software directly into the Twitter app. This should increase live video updates on Twitter, with users replacing text with videos as they share important events on the platform. Live video is being touted as the future of social media, and the total daily digital video consumption of an U.S. adult is expected to reach 72 minutes in 2017, across all digital devices. After its global rollout in April this year, Facebook Live is gaining traction and an increasing number of companies that have their pages on Facebook are using it as a platform to connect with consumers. The social media giant is focused on videos and is reportedly paying more than $50 million to influencers, publishers and celebrities for live video use. While Twitter’s Periscope had the first mover’s advantage in terms of live video, Facebook with its large user base and huge push in this segment appears to be marching ahead. By allowing users to broadcast videos directly from its app, Twitter has taken a crucial step to make its platform easier for sharing live videos, which can also be re-shared just like a tweet. This should increase video traffic on its platform. However, given the intense competition from Facebook, it remains to be seen whether this will impact user engagement significantly.
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75% of World’s Mobile Data Traffic To Be Videos By 2020
Videos are a powerful and spontaneous way of sharing life events and news with others. Facebook and Twitter are both aggressively pushing videos both as marketing and a sharing tool. By allowing users to record and broadcast their own videos via mobile cameras the companies are challenging the popular notion that videos need to be shot professionally. The popularity of live videos is likely to increase in the coming years. In fact, Cisco forecasts that three fourths of the world’s mobile data traffic will be video by 2020. A live feature can increase user engagement tremendously, since it encourages users to log on to the platform at a certain time and for a certain duration to witness the entire event live. If Twitter is able to increase the number of users sharing live videos on its platform, this should have a positive impact on its user engagement levels. According to our estimates, the number of timeline views per U.S. monthly active user for Twitter will increase gradually from around 200,000 in 2016 to 209,000 by the end of our forecast period.
This metric is a key driver of Twitter’s valuation and a significant change in the number of timeline views can have a material impact on our price estimate for the company. For instance, there can be a nearly 20% upside to our price estimate if these views increase rapidly and reach nearly 300,000 by the end of our forecast period.
Twitter is struggling to gain users and increase their engagement on its platform, which in turn impact advertising revenues of the company. The popularity of live videos is a trend the company can tap into to increase user engagement. While this might potentially mean the end of Periscope, integrating this feature with the Twitter app is a logical decision that can simplify broadcasting videos on its platform. However, whether this will increase user engagement remains to be seen, given that Facebook and Instagram (with a larger user base) both offer similar feature and compete directly with Twitter.
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