Despite Difficult Earnings Report, Twitter Sees Big Money In Premium Live Streams

Hope and new budgets are on the horizon as the company attempts to turn live video into dollars.

The news from Twitter today was all too familiar – another disappointing earnings report, and another drop in its stock price. But there was also something else to pay attention to, that was a bright spot in an otherwise dismal day for the company.

In a matter of weeks, Twitter has moved from a platform that hosts live amateur video (Periscope) to a serious player in live professional video as well. In quick succession, the company streamed matches from Wimbledon, aired the proceedings from the Republican and Democratic National Conventions, and announced deals to broadcast Major League Baseball and National Hockey League games (date TBD). It will air a package of NFL games this fall.

While these streaming deals weren't enough to salvage Twitter's second quarter — its stock fell 10% when it reported revenue results that missed expectations Tuesday — the company repeatedly emphasized their value in a letter to shareholders and in a call with analysts held after its results posted.

"Live-streaming video instantly shows the value and power of Twitter," the company said in the shareholder letter. "Our two main initiatives in this area — Periscope, and our new Twitter live-streaming video experience — are showing great promise."

Don't underestimate the professional streams' value to Twitter. Not only are they giving the company high-quality video content it can use to compete against its increasingly video-focused social competitors, they're opening up ad budgets outside of the traditional social media bucket Twitter has long been confined too. This likely means Twitter will see more opportunities to win deals that don't involve going head to head with Facebook for ad money.

"The dollars will come from different buckets outside of the digital social bucket which we've historically been in," Twitter chief financial officer Anthony Noto told BuzzFeed News in an interview following the call.

Adam Bain, Twitter's chief operating officer, said on the call with analysts that video is now the top revenue-generating ad format on the platform, an impressive jump given that many of the products didn't exist one year ago. Although not all that video is live, it's clearly where the company's focus is heading. "We have become a video-centric platform," Bain said.

This is Twitter becoming the first and second screen. But to get the most out of these live streams, Twitter will need to find out how to display them alongside tweets in a way its users can get value out of. The commentary streaming alongside YouTube's convention streams, for instance, has essentially been waterfalls of brain waste laid bare for the world to see.

Asked about this, Noto offered up a scenario Twitter could potentially use for sports. "We can give you tabs to click on the timeline of one team or the other team, we could give you a tab that says just expert commentators, we can give you a tab that just says top tweets," he explained. "It's as if you're in the room with them. It's as if you're in the bar with a local fan favorite."

Right now, even the prospect of that experience has got Twitter's phones ringing, said Noto: "The calls and the inquiries we got from advertisers wanting to buy that inventory has been really significant."

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