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March 28, 2024

NFL games just might be a Hail Mary for Twitter

2016 NFL Week 17

AP

Buffalo Bills running back Karlos Williams (29) reaches the ball over the goal line for a touchdown in front of New York Jets’ Marcus Gilchrist (21) during the first half of an NFL football game Sunday, Jan. 3, 2016, in Orchard Park, N.Y. (AP Photo/Bill Wippert)

SAN FRANCISCO — Thursday night's matchup between the New York Jets and Buffalo Bills may be remembered as the beginning of an era for Twitter — or the beginning of the end.

The San Francisco social media company that has struggled to attract more users and impress investors is unveiling an offering far different from the feeds of short text posts it's known for: Live-broadcast apps meant to stream football games and other mass-market fare to televisions via Apple TV, Amazon Fire TV or Microsoft's Xbox One.

It's a big change for Twitter, which has until now mostly existed on computer screens and mobile devices, and a big play for advertisers and users who may have previously struggled to understand the value of Twitter. But, analysts and industry experts wondered, will it be enough to keep the struggling social media giant afloat?

Starting this week, television apps will allow Twitter users and nonusers to view 10 of the National Football League's Thursday night games live, in addition to other videos from the National Basketball Association, Pac-12 Networks, Campus Insiders, Bloomberg News and financial news startup Cheddar. Users can also play videos created in Twitter's Vine and Periscope on their televisions.

"These devices will bring Twitter's live-streaming video experience to life on the TV screen,'' Chief Financial Officer Anthony Noto said in a statement Thursday. "Twitter has always been a great complement to TV and now fans can enjoy even more premium video with live Tweets — and the best content on Twitter — right from their TVs. We're excited to introduce this new experience to people without requiring a paywall or having to log in to Twitter.''

Before it unveiled its TV apps, Twitter had planned to broadcast a live CBS feed of Thursday night's game between the Jets and Bills only on its mobile apps and website, along with commercials from brands such as Budweiser and Bank of America — and its own unique brand of commentary from users' tweets.

Expanding access to video feeds may increase the likelihood that people who don't normally use Twitter will sign up to watch football, analysts said. But one issue may remain: Football fans already have many ways to watch NFL games — even if they're cord-cutters who have done away with traditional cable.

The gamble is a serious one.

Twitter paid the NFL $10 million in April for streaming rights, outbidding social media rivals like Facebook.

If it doesn't pay off in eyeballs and ad dollars, industry experts said, Twitter could be in serious trouble.

"It all comes down to how much ad revenue they're going to get on the backside of this deal,'' eMarketer analyst Paul Verna said. "If it succeeds, it becomes a foundation Twitter can build on. If the response is lackluster, if the audience is small, if people tune in but then tune out or there are things about the interface they don't like, if there are technical problems — any one of those things could create a total downward spiral for Twitter.''

In a July call with investors, CEO Jack Dorsey announced that a barrage of changes to the service, new features and a renewed emphasis on live video had not visibly lifted advertisers' spending. Revenue in the company's second quarter missed Wall Street's projections, sending stock plummeting.

Share prices have rebounded some since, though some industry experts believe Twitter may soon go the way of Yahoo and be bought by a bigger, and more stable, company.

"If you look at Yahoo, its revenue was declining, its product wasn't expanding and its user base was kind of stalling. They tried to do a number of product enhancements and feature changes and pivots that were unsuccessful,'' said Neil Doshi, a senior Internet analyst at Mizuho Securities. "If you look at Twitter they seem to have a large user base that's now stalled in terms of growth. The revenue keeps decelerating dramatically and the margins are expanding but not in a really large, meaningful way. They've tried a number of product changes and a bunch of ways to get people to come back to the site and so far they haven't been all that successful.''

The problem with a possible Twitter acquisition is two-fold, analysts said. The company is losing money, but may still be too expensive to be a safe investment by another firm.

Twitter shares, which closed at about $18 Wednesday, remain well below their IPO price of $26. Its user base, about 313 million per month, has not grown substantially in about a year.

"I don't think anybody's buying them, because I don't think anybody wants them,'' Wedbush analyst Michael Pachter said. "Nobody wants to buy them because nobody thinks they can fix them. I think that once they have some success, they're actually at a much higher premium because they can show what they're doing is working.''

SunTrust analyst Bob Peck pointed to three main reasons that another company might shy away from attempting to acquire Twitter: Dorsey, a Twitter co-founder who was officially reinstated as CEO last fall, has been at the helm of the company for only a year. Twitter is still pushing out new features — like its TV apps. And the board, which has appointed four new members in the past nine months, is widely believed to be supportive of Dorsey and his vision.

"The fourth quarter will be critical in demonstrating progress or emphasizing challenges,'' Peck wrote in a note to investors. "We think the company would want to see the success of these initiatives before considering any potential sale ... which could lead to a 2017 sale process.''

Google has previously expressed interest in buying Twitter. In 2011, Larry Page, Google's CEO at the time, reportedly invited Dorsey to Google's Mountain View headquarters to discuss a deal.

It went nowhere — just like Twitter's 2008 talks with Facebook.

Depending on how Twitter's TV apps perform, Dorsey may be taking more meetings as soon as next year.

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