Twitter (NYSE:TWTR) deserves a little credit. This week, the company made two strategic moves to expand its video offerings, and both are significant.
The first came when the company snatched up the London-based, machine-learning company Magic Pony. The company's technology will be used to improve Twitter's video compression, allowing for better-quality videos that eat through less user data. Additionally, Magic Pony's machine-learning technology should help Twitter to serve up more-relevant videos to its users.
Twitter CEO Jack Dorsey said in press release that, "Magic Pony's technology -- based on research by the team to create algorithms that can understand the features of imagery -- will be used to enhance our strength in live video, and opens up a whole lot of exciting creative possibilities for Twitter."
Some of those new possibilities came a day after the Magic Pony announcement, in the form of extended video lengths in the Twitter and Vine apps. Twitter will now allow its users to post 140-second videos instead of the previous 30 seconds, and will eventually extend the former 6-second limit in Vine to 140 seconds, as well.
The new video features come as Twitter is looking to take on Facebook's (NASDAQ:FB) growing video dominance. Twitter says video tweets are up 50% so far this year; but Facebook is the clear video king.
Take a look at these stats:
- Facebook users spend three times the amount of time watching a Facebook Live video than they do non-live videos.
- U.S. Facebook users posted 94% more videos than they did last year, and worldwide users posted 75% more.
- Nearly 8 billion videos are viewed from Facebook every single day
Twitter's competition with Facebook has been compounded as its rival has built Instagram into a 500-million-user platform -- complete with its own videos -- and increased competition from Snapchat. The ephemeral-video-messaging platform has amassed 7 billion video views per day.
Looking to video to drive ad growth
Twitter is suffering from falling revenue growth, and it's hoping that more videos -- and longer ones -- can help turn that around. In an interview with The Wall Street Journal back in May, James Douglas, executive director of a social-media agency owned by Interpublic Group, said that brands are moving away from promoted tweets, and are looking for "more immersive advertising such as video or interactive ads." That's been great for Facebook, which saw its ad revenue increase 57% in Q1.
The good news for Twitter is that the market for digital video-ad spending is expected to hit $9.84 billion this year, and the company's recent focus on boosting video lengths and implementing Magic Pony's technology should help its video prospects. Twitter has previously said that its revenue from video ads nearly tripled year over year in Q1.
Twitter investors should be looking to see if the company can use its new video changes to increase ad spending overall. Twitter's chief operating officer, Adam Bain, said on the Q1 earnings call that, "In the quarter, video was strong, but that was partially offset by some softness that we saw in older legacy brand products." And he went on to say that, "... we see a clear opportunity ahead to increase our share of the brand advertising market, especially around video."
It would seem, then, that Twitter is looking to video as a way to keep pace with Facebook, and as a lifeline for its advertising revenue. I think it's more likely that Twitter will be able to grow revenue through video than it is for the company to use video to close the gap between the two social media companies.
Facebook's stellar video stats and its recent push with Facebook Live is quickly making it the go-to social media platform for video. Twitter may be able to boost its own revenue by adding longer video lengths and beefing up stats for advertisers, but at the end of the day Facebook simply has too many users and too much engagement for Twitter to catch up.
Chris Neiger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Facebook and Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.