Pro Sports Contracts Not a Winning Strategy for Twitter

Twitter is jumping into sports, signing deals with the big four U.S. leagues over the past few months to stream some of their content as the struggling social media company seeks to boost a stagnant user base.

“This is Twitter’s last stand: live events,” says Victor Anthony, Internet media equity analyst at Axiom Capital Management in New York. “Sports is the holy grail. If they get this to work, it could spark a turnaround in moving users and advertisers.”

He and other analysts remain skeptical, however. They say diving into sports content doesn’t solve a fundamental problem of Twitter: It’s too complicated. Casual users often complain that it’s difficult to find what they want, and filter out what they don’t want, on the social media microblogging site.

The company opened with a bang when it went public in November 2013, with its shares soaring 66 percent in less than two months of trading, to $69. But the stock has dropped nearly 72 percent from that December 30, 2013, high to below $19, as of Tuesday. Slumping user growth and frequent turnover of senior management have plagued the company, despite the popularity of its 140-character messages. Twitter’s user base is there, though there are only so many possible users the site can draw.

“There are hundreds of millions of people globally who have tried Twitter and stopped,” says Peter Stabler, a digital media equity analyst for Wells Fargo Securities in San Francisco. “Twitter is ubiquitous, but some people find it far too difficult to use. The sports deals don’t speak to that.” The number of Twitter users totaled 313 million monthly active users in the second quarter, up just 3 percent from a year earlier.

None of the ventures give Twitter exclusive broadcast rights. The agreement with the National Basketball Association doesn’t even allow Twitter to stream games, whereas the National Football League deal doesn’t include a large amount of advertising slots. That being said, what do the agreements include?

NFL.Twitter will show ten Thursday-night gamesthat will also air on either NBC or CBS and on the NFL Network. Twitter will show the networks’ national ads but can sell its own advertising during the 15 local time slots. Twitter says it has already sold 60 percent of its available ad time since signing the deal in April.

NBA.The league will produce two new programs for Twitter, including a weekly pregame show. The NBA also will double the volume of digital content such as highlights that it creates for Twitter. Twitter and the NBA will share ad revenue on these clips.

MLB and NHL.Twitter will broadcast one Major League Baseball and one National Hockey League game each week, and can sell all of the advertising slots.

Twitter also has deals with Wimbledon and the college sports Pac-12 Networks. It’s also in talks with Major League Soccer and the Professional Golfers’ Association, theNew York Timeshas reported.

“In theory, this should drive user engagement and advertising, which already has been strong for Twitter’s NFL deal,” Axiom Capital’s Anthony says. In light of Twitter’s struggles of the past couple years, “you have to take a wait-and-see attitude on anything with them,” he says. Other new site features by the company, such as last year’s introduction of curation tools “Moments” and “While You Were Away,” didn’t exactly set the world on fire, Anthony notes.

Twitter reported a loss of $107 million on revenue of $602 million in the second quarter, compared with a loss of $137 million on revenue of $502 million a year earlier.

体育deals do distinguish Twitter from Facebook and YouTube, which haven’t obtained rights to live sports activity, Anthony notes. Facebook and Snapchat are negotiating with media content providers to broadcast live sporting events and entertainment. Twitter’s moves may reflect the handiwork of its CFO, Anthony Noto, who previously held the same title at the NFL.

It’s not surprising that the company is doing well with ad sales for its Thursday-night NFL games, Stabler of Wells Fargo says. “A lot of large companies advertise on the NFL,” he says. “Why wouldn’t they look at another extension of the NFL package? They would view Twitter as a way to amplify a large investment they already made.” Yet the amount of money Twitter can charge NFL advertisers depends on the size of its audience, of course.

Analysts question how a small number of games will attract large viewership, especially with many potential Twitter users declining to sign up for the service. “These deals bring new and interesting content, but will it get people to tune in?” Stabler says.

One problem for Twitter in drawing viewers is that many fans won’t watch a game on its mobile platform if they can’t use Wi-Fi, because of the heavy data usage involved, he says. Many who would be using Wi-Fi would be doing so from their homes, where they can just as easily watch the game on TV.

In the end, Twitter’s sports foray may amount to an effort to make the company more attractive to a suitor, says Richard Greenfield, media analyst at BTIG in New York. Talk has abounded in recent weeks that Twitter may be sold. “For a legacy media company, sports is so critical, and Twitter is trying to attract the interest of larger media companies,” Greenfield says.

安东尼看到事情有点不同。体育deals represent an effort to turn around the company, rather than sell it, he says. “If they are successful in doing that, there’s no need for it to be sold. If not, then they seek out an acquirer.”

Get more oncorporations.