In the midst of all the noise regarding the temporary banning of controversial political commentator Alex Jones, and the subsequent reprisal of the whole censorship debate, it would have been easy to overlook news that Twitter (NYSE:TWTR) and Adidas (OTCMKTS:ADDYY) were teaming up to deliver video coverage of eight high-profile high school football games this year.
What does this mean for current and would-be owners of TWTR stock? Honestly, not much. Even if these games end up being the biggest high school football games of the year, it’s still just high school sports. There’s not a great deal of money to be made by anyone at this level of the game.
It’s an interesting footnote all the same, however, in that it points to a bigger-picture strategy Twitter is employing — perhaps without even realizing it.
Rather than insisting on securing the expensive broadcast rights to all the world’s biggest sports events, the micro-blogging company is aiming for a lot more lower-tier, lower-cost content that just might pull plenty more people into the Twitter-sphere.
If you’re not familiar with the term, in this context, “long tail” means the video and entertainment content that is less than mainstream. It’s cheaper to secure because it attracts a smaller audience. Being cheaper, however, also means a buyer can own a lot more of it.
In other words, quantity over quality. The challenge is simply one of managing costs and driving outcomes on a small scale rather than a large scale.
Yes, Twitter delivers some major mainstream content, too. It’s carried some NFL games in the past, and it’s carrying some Major League Baseball games this year. It’s live-streamed some big-time concerts as well.
At the end of the day, though, Twitter just doesn’t have the deep pockets and spending power of Amazon.com (NASDAQ:AMZN) and others. Amazon owns the rights to broadcast this year’s Thursday night NFL games.
Method to the Madness
That’s not to suggest Twitter is idly standing by, however. In April, at this year’s Digital Content NewFronts conference, Twitter announced it would be offering 30 new premium streaming television programs including Ellen Degeneres’ CELEBrate, MTV News, BuzzFeed News, ESPN’s SportsCenter Live and a slew of video-gaming content, just to name a few.
That’s in addition to the video content already available at the site — for free — from the likes of the NBA, Bloomberg and more.
It’s hardly a threat to the cable television industry. Indeed, anyone looking for anything like traditional cable television or pure-streaming services like Netflix (NASDAQ:NFLX) will be sorely disappointed by Twitter.
It’s mostly niche stuff, more clips than full-length programming. There’s just enough of this oddball, quirky short-form video content, however, to let Twitter cast a surprisingly wide net.
In turn, there are at least a few people out there in the world who may have never visited Twitter.com on their own that just might be interested enough in — say high school football — to check out the aforementioned games. A few of them may even stick around, joining the Twitter fold.
It’s a low-cost formula Twitter has quietly been repeating over and over again, picking up nickels and dimes along the way while everyone else is diving for the same dollar.
Bottom Line for TWTR Stock
Don’t get the wrong idea. Fortune favors the bold. While owners of TWTR stock certainly appreciate the company’s cautious approach in becoming a video venue, at some point it will have to swing for the fences again and make a big-time bid for a major draw like professional sports.
And to its credit, Twitter is still doing some of that. It inked a three-year deal earlier this year, for instance, to carry several Major League Soccer games.
By and large, though, Twitter’s video content strategy is fiscally conservative and may actually yield a better return on its investments than the splashier content deal-making being done by its peers like Amazon.
Only time will tell if the slightly higher cost will quell Prime’s growth.
In the meantime, Twitter may be losing regular users on a net basis, but it’s seen modest improvements in ARPU (average revenue per user), and some observers believe its ARPU will continue to grow as its broad library of niche video content slowly but surely draws an increasingly interested crowd.
Whatever works for the long haul for TWTR stock.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter, at @jbrumley.