Can Twitter become a multimedia powerhouse?

Can Twitter become a multimedia powerhouse?

By JP Mangalindan, Writer April 17, 2013: 3:02 PM ET

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The social network might launch a music service this weekend and seek TV content deals with Viacom and others. What’s the endgame?

FORTUNE — Can a social network once entirely conceived around 140-character real-time updates transform itself into a multimedia hub? Twitter seems intent on trying.

Bloomberg reported this week that Twitter is in final negotiations with networks like Viacom (VIAB) and Comcast’s (CMCSA) NBCUniversal that could let the social network distribute TV clips and sell ads alongside them.

Over the last 12 months, Twitter has made some bold moves — acquiring startups, releasing new features, and reportedly working on TV deals, leaving small hints as to what it’s up to. Analysts agree: The social network is gunning to become a full-featured media platform.

“That’s what it’s going for long-term, but short-term, it’s a communication conduit where information flows through, kind of like a protocol of information,” explains Jeremiah Owyang, a partner with the San Mateo, Calif.-based Altimeter Group, a research and advisory firm. “They want to be more than that. They want media content to flow on top of it and to share on top of it. They want to be more than that throughway because they want to monetize that as well.”With over 200 million monthly active users tapping out over 400 million Tweets daily, the social network has grown exponentially since Jack Dorsey founded the company seven years ago. And its primary revenue generator, advertising, is expected to generate $583 million this year and nearly $1 billion in 2014 according to eMarketer.

Those might seem like solid, though not stellar, numbers when stacked — perhaps unfairly — against Facebook (FB), whose revenues are also driven by ad products. According to Topeka Capital Markets, Facebook will book $6.5 billion in sales this year and $8.4 billion in 2014. While Twitter and Facebook offer vastly different user experiences, for Twitter, there are clearly more revenue stream opportunities to explore.

Which is why Twitter has been so aggressive recently. Last March, it launched the six-second video-sharing app Vine; this weekend, the company could launch its rumored music service. It also introduced new features like photo filters — this time offered by Twitter rather than Instagram — and Twitter Cards, so developers can have more information appear when a user, say, Tweets a link to a web story. Along the way, it bought startups like the music discovery service We Are Hunted and Bluefin Labs, which analyzes online chatter about TV shows.

Twitter’s success hinges on a simple, but often overlooked, principle: It must adhere to its inherent strengths — and avoid the temptation of overextending itself. Twitter’s 200 million-strong users flock to it for what Altimeter’s Owyang calls “micro media content,” morsels of information distributed real-time, whether it’s news of Beyonce’s pregnancy or riots in Egypt. Twitter uses are not flocking to the site to view feature-length films. Movie studios first tried that out a few years ago on Facebook, but it doesn’t seem to have picked up much steam. (When was the last time you or a friend sat and watched a two-hour movie on the social network?)

When Twitter offers more media on its site — and not as a standalone product — it should remember why users go there in the first place. “I could see some new form of content that’s wholly consumed on Twitter,” admits Gartner analyst Mike McGuire. “But I don’t know about the 22-minute sitcom we’re used to seeing on TV, the hour-long drama, or the two-hour movie.” Chances are, they’ll be hunting for a teaser or a clip, and not the full package.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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