Twitter’s live video ambition risks all-out content spending war

Twitter's first-quarter earnings last week gave investors something to cheer about with users growing again and advertising engagement up on the platform. And while the company touts growth of its video content and livestreaming service, its ambitions should raise some eyebrows.

The social media site's CEO Jack Dorsey announced on Monday the first details of its plan for content that is always on.

"We want to be the first place that anyone hears of anything that's going on that matters to them," Dorsey said at an event in New York. "The first place where people hear of what matters."

Twitter announced 16 new deals on Monday including streaming sports and music concerts. Having targeted video around big events like sports or politics is one thing, but filling up 24 hours a day, every day with content, without it being low quality, could be a big challenge.

Content is king, and this phrase has never been truer than in today's world. Companies that once had nothing to do with video content now are all jumping in. For example, Apple with its plan to release comedian James Corden's "Carpool Karaoke", or e-commerce giant Amazon's massive push with its Prime Video streaming service.

The danger for Twitter is that it is coming up against larger rivals with deep pockets that are not afraid to sink cash to win market share and users. It risks a content war and this could concern investors. And it has already begun.

Amazon signed a deal with the NFL to stream 10 Thursday night NFL games, with media reports suggesting the one-year deal was worth $50 million. Last season, Twitter had the rights to this deal and paid $10 million. Amazon came in with $40 million more and took it away.

Anthony Noto, Twitter's chief operating officer, brushed this worry aside in the BuzzFeed interview and said the company could bid for other rights.

"We have a really big audience when there's a pay per view UFC match," Noto said. "Should we provide that content to the audience on Twitter that's not watching it, but might like to after seeing tweets about it? That's something we'd consider."

Jack Dorsey, co-founder and CEO of Twitter
Drew Angerer | Getty Images
Jack Dorsey, co-founder and CEO of Twitter

There's no denying that Twitter is the place for real-time conversation around events. It said it had 5.1 million unique viewers when it streamed the Grammys, with many of those people likely tweeting. But as it continues its video push, it faces up to Netflix, which is planning to spend $6 billion on content this year while Amazon's content spend continues to rise.

If Twitter comes up against these two behemoths – which have investors willing to give them time to invest money – it could find itself outbid on some content, which could put a spanner in the works of its 24/7 content plan.

It's also questionable whether investors will tolerate a content spending binge by Twitter, given that it is yet to prove that it can continue to grow users for a sustained period of time.

There's no doubt that live video is the future of Twitter, but any plans to compete with the giants will require tactical decisions, targeted spend and focused programs to avoid an all-out content war.