Twitter continues to disappoint, as the most recent business development doesn’t seem like a large enough needle mover to drive earning/sales results given the weakening backdrop of audience metrics, which points to weak quarterly results due to sequential declines in audience metrics, which I had alluded to in my prior Twitter article. Twitter’s next major business development was the secured licensing rights for Thursday Night Football which will span 10 games, which was acquired for less than $10 million according to Re/Code. This deal might sound savvy on the part of Twitter, but nowhere near as incremental to sales as some adjustments to back-end Twitter ad-tech or front-end design. Basically, it would have been more cost effective to add the salaries of 100 more app/web developers to expand the capabilities of the app than it was to acquire rights for sports broadcast given the limited penetration of live content via the web and the difference in time scale for viewing. Perhaps, YouTube could have been a better partner for this than Twitter. But, given the less than compelling economics and excessive amounts of advertising required to float the content, both Facebook and Google took a pass on the deal. It’s becoming painfully obvious that the large web publishers aren’t interested in a wholesale content licensing model for conventional media franchises even if it's sports broadcasting. Likewise, none of the cable channels have built the scale necessary to broadcast via an OTT application, or have a large enough web presence to launch a meaningfully scalable streaming experience. Twitter was the last one standing among those who had negotiated with the NFL for licensing rights. I think the biggest problem according to sources was the non-exclusivity of the content rights and the mismatch of monetization for the game, which I had alluded to earlier. Source: Morgan Stanley I believe Morgan Stanley is right to anticipate a relatively low amount of penetration, but even 6% seems a little stretched for an optimistic scenario. Part of this is because it’s non-exclusive; so any household with a cable subscription (roughly 100m in the United States) can easily avoid the hassle of using Twitter to watch the game. Furthermore, the average Twitter user spends 90 seconds per day, and mobile users spend 3 minutes per day according to Morgan Stanley. Therefore, Twitter is heavily skewed towards very limited spurts of engagement whereby users will take a quick glance at the timeline, which gets heavily cluttered with all forms of content besides live streaming games. In other words, the likelihood of Twitter’s content reaching the average feed is relatively low to begin with even if it were to dump the live game into everyone’s feed arbitrarily. With usage metrics of 3 minutes per day, the average users will likely miss the prime time viewing slot to go and watch the game on TV or do some other activity not pertaining to sports. Sports is only a great equalizer for pre-existing broadcast networks and cable networks. Sports content isn’t ready to transition to online channels, because there’s not a large enough live viewing audience on any platform. The nature of online is the accessibility and search-ability of content that gives users the impression of something fresh or novel for content that’s been published years ago. The cable networks strictly operate off of a system of timeslots that can be time shifted via DVR recordings, so even as users consume content online it’s not like they’re foregoing the capability of viewing stuff on demand via cable networks. Therefore, I can’t comprehend how Twitter’s strategy is any more differentiated than what’s being provided by the conventional networks with the exception that it’s freely accessible. But, even though it’s accessible, the availability of sports content in most households makes the move much less incremental. Assuming Twitter broadcasts to its entire user base for the full duration of the programming (approximately an hour and 30 minutes), I estimate that the likelihood of hitting the same time slot for when users are actively using Twitter is at 6.25%. I divided the avg. time spent per user by the total minutes in a day, which amounts to .002 and then multiple by 30 because there are roughly thirty 90 seconds slots through an hour and 30 minutes of programming, to arrive at the actual impression rate. Therefore, when doing the math, I believe 6.25% of Twitter users will have an impression of the game on the timeline, but of that amount a much smaller sub-segment will watch the NFL Thursday Night game. Roughly 20.3% of Twitter users live within the United States, and of the United State population roughly 1/3rd watched the super bowl last year. Basically, the addressable market for Twitter impression is roughly 6.69% of those impressions which translates into 1.338 million engagements/views for the entire NFL Thursday game. However, cable is a substitute of which 80% belong to a cable subscription household, which implies that of 1.338 million engagements, roughly 80% will transition to a cable box anyway, which translate to 267 thousand average viewers per night. So when isolating it down to demographics, timing and users my estimate is significantly smaller than Morgan Stanley’s already miniscule estimate of 1.1 million viewers. I anticipate $1.48 million in revenue using Morgan Stanley’s assumption of $50 CPMs at 3-minutes of advertising. Since Twitter acquired the content licensing for $10 million (or perhaps less) they stand an extremely high probability of losing money on the deal. While the internet can transition some programmatic content to digital, sports will be the last to transition successfully. It’s not economically feasible on Twitter much less Facebook or YouTube. The NFL licensed the content to show visible progress on licensing some of their content to online platforms. But when it comes to renewals, I highly doubt Twitter will come back for more Thursday Night Football.