This Thursday, NFL fans will turn their attention to Buffalo as the Jets and Bills duke it out, but on Wall Street and in Silicon Valley, all eyes will be on Twitter. The tech company has pinned the hopes of its shareholders on a live-streaming strategy whose flagship programming, a package of NFL games, is finally set to kick off with that game.
The match between the Jets and Bills is the first in a set of 10 Thursday night football games that will be live streamed exclusively by Twitter over the internet. For the San Francisco company, these games are part of a major initiative to use the video streaming of live events, particularly sports, as a way to drive user growth and engagement, and, in this way, ad sales.
This strategy is "an important element in that it continues to differentiate why people should come to Twitter," Twitter chief financial officer Anthony Noto told Inc. Noto previously served as the CFO of the National Football League and was instrumental to the new partnership between the two entities.
"At the end of the day we have two jobs with our audience: We have to, in a very clear way, describe why they should use Twitter, and then we have to make the product so simple they don't have to understand how to use Twitter, and the live experience is a familiar experience," Noto said.
Financially, this deal is not make or break for the tech company. Twitter reportedly paid $10 million for the entire package, or about $1 million per game. That's nothing compared with the $45 million CBS pays for the rights to broadcast these same games on TV. Additionally, that $10 million is a mere droplet compared with the bucket of nearly $3.6 billion in cash that Twitter has in the bank.
And yet, these games are of huge importance, particularly when it comes to the perception of Twitter.
To the ire of Wall Street, Twitter has seen a continued decline in revenue growth over the past eight quarters while the growth of its active users has all but plateaued. There's been enough frustration to drive former CEO Dick Costolo to step down last summer, and it has caused Twitter shares to lose half their value, falling from $36 a piece last June to less than $18 at the close on Tuesday. Lately, even Twitter's board of directors has reportedly begun to discuss whether it is finally time to sell the company.
"We seem to be almost exactly where we were a year ago," said Jan Dawson, chief analyst at Jackdaw Research. "There seems to be very little progress on some of the big things in terms of getting user growth going again, in terms of making Twitter more accessible for new users, in terms of dealing with abuse, in terms of driving revenue growth."
Though the return of co-founder Jack Dorsey returned hope to the flailing company, progress has been slow, if not outright absent. Earlier this year, Dorsey revealed a five-pronged plan, which includes a focus on streaming live content, to the pleasure of investors, but the execution of the proposal has been agonizingly slow to follow. Now, nearly one year since Dorsey's appointment as CEO, shareholders have grown impatient and are looking for something, anything, they can point to as a sign that Twitter might finally be back on the right track.
"If this doesn't work, Dorsey will be under even more pressure," said Adam Sarhan, CEO of 50ParkCapital.com, an investing and consulting firm. "If he can't deliver, they will be forced to find someone who can."
The company treated this election's party conventions as practice for the NFL games, running live streams of each as a way to experiment with the format. Hoping its NFL games will prove to be a success from which it can piggyback even more live streams, Twitter has already gone and acquired more sports programming, announcing deals that will allow the tech giant to stream MLB and NHL games as well as exclusive NBA shows. Additionally, the tech company created custom emoji for each of the 32 NFL teams, giving users an additional means to remain engaged throughout the games and the season.
Most important, Twitter scrambled to solidify last-second partnerships on Wednesday that will allow users to watch live streams of the games through the Apple TV, Amazon Fire TV, and Microsoft's Xbox One. Twitter announced the new partnerships on Wednesday, just one day before the big kickoff of its NFL package. The Apple TV, Amazon Fire TV, and Xbox One Twitter went live on Wednesday for users in the U.S. and other select markets.
"These devices will bring Twitter's live streaming video experience to life on the TV screen," said Noto in a statement. "Now fans can enjoy even more premium video with live Tweets--and the best content on Twitter--right from their TVs."
On the web and mobile app, Twitter's Thursday night live stream will be presented as a video player with a stream of tweets below it along with a text window where users can type out tweets as they watch the mad dash of touchdowns and tackles. Both will also include an option to watch the game in full-screen mode.
For Twitter, which has long struggled with introducing new users to its confusing world of hashtags, @ signs, and followers, the NFL games present a unique opportunity to jump start growth. These games could serve as an easy on-boarding ramp for the millions of NFL fans who are not already active on Twitter. With a stream of football plays and tweets from fellow fans to which they can react, Twitter will make it easier for new users to easily start tweeting and interacting on the service.
Fans "know what Jets-versus-Bills looks like. There's no question why they should use it. They're a fan, they just click on it, and when they show up, they don't have to know how to use Twitter," Noto said. "It's possible for us to use live video to leverage a familiar behavior that people do and use that familiarity to bring them through a window that exposes Twitter to them in a way they've never seen it before."
Twitter has yet to commit to sharing the viewership stats for its live streams. In all probability, the company will publish those figures if they are a whopping sum that will impress shareholders, but expect Twitter to be more cagey should users be slow to flock to the streams.
Fortunately for the company, the bar for success has been set quite low. Previous NFL games that have been simultaneously aired on TV and streamed online have yielded modest viewership figures that should be easily matched or surpassed by Twitter. The previous three Super Bowls averaged 1.4 million, 800,000, and 528,000 live stream viewers per minute. Meanwhile, the Bills-Jaguars match last year, which was exclusively broadcast online by Yahoo, averaged 2.36 million viewers per minute.
If Twitter can manage to average a mere 500,000 viewers per minute for its broadcasts--which is about a 10th of 1 percent of its total active user base--that would constitute a success, said Phil Davis, CEO of PhilStockWorld.com and PSW Investments. Should Twitter somehow fail to draw that kind of audience, the damage will be minimal aside from some negative headlines, Davis said.
"I think it will hurt Twitter a bit in perception but certainly have no financial or operations effect. A success, however, would open up some very bullish speculation on Twitter," Davis said. "Kudos to Dorsey for coming up with an almost can't-lose situation."
Already, the company appears to have done a good job building excitement around the game--since Sunday, more than 48,000 tweets have been sent featuring the game's hashtag or the link to the live stream, according to Quid, an artificial intelligence data-analytics company. Even more tweets--109,000 total--that feature the game hashtag, game link, or the hashtags or handles for the Bills and the Jets have been tweeted in the same time frame.
However, attracting viewers is just half the battle. Twitter will also be tasked with bringing in more advertisers. Twitter must pitch these games to brands. It must monetize the Thursday matches and use them as a springboard with which it can re-accelerate the growth of its ad revenue.
"The thing we have that's valuable is our audience that is connected to each other. Of those four to six million people who are on Twitter looking at tweets about the NFL game on a Thursday night, they're talking to each other having a conversation," Noto said. "That connected audience drives virality, it drives popularity."
"We also have a young audience," said Noto, pointing out that a large portion of Twitter's audience falls into the 18-to-24 and 25-to-34 categories. "We can reach these harder demographics who are not necessarily willing to pay for television and extend the reach of the NFL."
Among the advertisers that have already signed up for Twitter's Thursday night games are Anheuser-Busch InBev, Nestlé, Sony Pictures, Ford, Bank of America, and Verizon, a Twitter spokesman said. The company has been selling ad packages for the games ranging from $1 million to $8 million, according to the Wall Street Journal.
"Marketers, corporations say 'I don't really care much about your Thursday night football broadcasting. I care about ways to use Twitter to reach new customers,'" said Jeff Reeves, analyst and executive editor at InvestorPlace.com. "It's all about how you turn that into something you learn lessons from to change your business or how you can actually make money from marketers and advertisers. If you can't do that, it's just an NFL game."
For the Jets and the Bills, a first win of the season is on the line. More critically for Dorsey, Noto and company, there is a special opportunity to turnaround the negative perceptions that Twitter has carried for the better part of the past few years. Don't fumble.