Why Twitter and Facebook Are Focusing on Live Events

 

Posted on Jun 01, 2016

Twitter and Facebook have undertaken several initiatives to grow their live video content

Twitter (TWTR) and Facebook (FB) have started to focus on broadcasting live events. Twitter acquired the live-streaming app Periscope last year and even added a live video search feature a few days ago. Last month, Twitter acquired the rights to stream ten NFL Thursday night games. Facebook has also started to give users alerts in their news feeds about live video streams. Then it launched Sports Stadium to update users about scores and conversations around live sporting events.

Video, especially live video, means higher user engagement than traditional text-based content. This higher engagement allows Internet companies to earn higher ad revenues for video content.

The future of the Internet is video

The NFL deal was especially important for Twitter, whose revenue growth is declining. AWall Street Journal report mentioned that Twitter won this deal despite rivals Verizon (VZ), Amazon (AMZN), and Facebook offering higher prices. As the chart above shows, Twitter’s revenue growth has continued to decline quarterly.

Facebook, on the other hand, doesn’t face issues with slowing revenue growth rates. Facebook managed to grow its revenues by 52% in 1Q16 despite being much bigger than Twitter. However, it also aspires to leverage the fast-growing video ad market. The future of the Internet is video. According to a report from Cisco, 75% of the world’s mobile data will go to video by 2020. So it makes sense for both Twitter and Facebook to focus on video content.

Facebook accounts for 5.4% of the PowerShares QQQ Trust, Series 1, ETF (QQQ).