Facebook Inc & Twitter Inc Poised To Disrupt This $80 Billion Market (NASDAQ:FB) (NYSE:TWTR)

- October 11, 2016

Facebook Inc (NASDAQ:FB) and Twitter Inc (NYSE:TWTR) are both in the infancy of their live video ambitions. Still, we are witnessing proof that each company has the infrastructure, platform, and social element to completely disrupt live video content as we know it today. And that disruption could be worth 10s of billions and big time gains for FB stock and TWTR stock.

How do we know it today? TV!

Live content’s ideal and most common instrument is pay-TV. Yes, Netflix (NASDAQ:NFLX) and Amazon Prime have original content and movies; YouTube is user generated video; but all of the live video content consumers watch is on pay-TV and is part of the cable network’s arena.

In many instances, the live content that people want to see, like football games, are not available for cord cutters. This fact is what keeps pay-TV valuable and alive.

presidential-debateHowever, don’t look now, but we are witnessing a paradigm shift where Twitter is successfully hosting football games, concerts, and debates with real social engagement.

Last night’s Presidential debate had 17 million tweets as consumers watched the special, which was the most tweets ever for a debate. It beat the first debate despite TV ratings for the second debate falling 21% versus the first round.

Maybe this is irrelevant, but the fact that ratings fell so much and tweets hit a new record suggests to me that more people went mobile and viewed the event on Twitter, via Bloomberg TV.

What these tweets coupled with Twitter’s Thursday Night Football deal proves is that TWTR has the ability to acquire live video content exclusively and partner with content providers like Bloomberg to provide a viewing option for cord cutters and millennials with a real social effect.

Twitter strikes first, but Facebook is coming around.

Facebook stockFacebook’s Live video approach has not prioritized programming like Twitter, but rather live content from its user base. According to Facebook, its users watch 100 million hours of video content each day. Much like Twitter’s record tweets relative to a lower overall rating of the Presidential debate, Facebook has seen an incredible degree of engagement related to its live video content.

Reportedly, Facebook Live videos get 10x more comments as videos posted elsewhere on the Web.

Albeit, Facebook is about to add a new element to its Live videos. Facebook Live will show several high school football games that showcase some of the best players in the country. The content is provided by the Bleacher Report, much like the debate was hosted by Bloomberg on Twitter.

While high school football is hardly a big ticket, this most certainly won’t be Facebook’s last time with live programming content. Don’t forget, Facebook bid on the Thursday Night Football rights, which it ultimately lost to Twitter.

An $80 billion market is presented

Neither TWTR nor FB are in the business of showing content on their platform for free.

Prior to Facebook and Twitter’s move into Live video content, networks like Turner, ESPN, Bloomberg, etc had to sell their content rights to cable and pay-TV service providers. Those pay-TV service providers then monetize the content via subscriptions and advertising. According to Statista, the TV advertising business will grow from $73 billion this year to $81.7 billion in 2020. It is a massive market that Facebook and Twitter are now exposed to.

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Furthermore, BNL Finance believes that Facebook long-term, and Twitter now are well positioned to grab a meaningful chunk of this market.

Why? The answer lies in Facebook and Twitter’s platform, and the first meaningful disruption to the status quo.

The “status quo” is cable, satellite, and pay-TV. All provide an effective viewing experience, and most of the big ones now have mobile viewing options. It would take a lot to disrupt that market and the status quo, but just like DVDs and tapes, there is always the next big thing, something to disrupt even the most safe of industries.

We believe the pay-TV and TV advertising market will face huge changes because of Twitter and Facebook. It is not because their respective mobile viewing is so much superior to DirecTV and Time Warner Cable. Instead, it is the social element that no cable company can provide, an experience that consumers desire.

In retrospect, there is a reason that Facebook Live videos get 10x more comments than videos posted elsewhere, and why Twitter broke tweet records on a debate that lost 20% of its viewers. It is because people want to communicate and discuss things that are happening in real time, and now that live video content is hosted on these social networks, we believe that programmers and content providers will flock to Twitter and Facebook.

Why Facebook & Twitter will become the preferred platform for live video content

All things considered, it is quite easy to discuss why programmers and content providers will prefer Facebook and Twitter over the likes of Time Warner Cable and DISH Network. The answer is data!

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  1. By The Weekend Market Blitz: TWTR, ACAD, WFC, & AMZN on October 15, 2016 at 5:50 pm

    […] The case for owning Twitter (TWTR) regardless if it is acquired.  […]

  2. […] previously explained, we believe that Twitter is poised to disrupt the $80 billion pay-TV advertising industry, successfully combining the technology to live stream […]

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