Meerkat And Periscope Side By Side

Meerkat (left) and Periscope (right) are making it easy to stream live video from anywhere. Credit: iTunes Store. 

If live video streaming from Meerkat and Periscope is the Next Big Thing in social media -- and it's looking that way -- then Twitter (NYSE:TWTR) might soon outrank its peers as the world's most important sharing platform.

Meerkat debuted to wide acclaim at this year's South by Southwest Interactive conference in Austin, Texas. Twitter's Periscope joined the fray soon after -- and it's been a roller-coaster ride since.

Livestreaming from Meerkat and Periscope has become so popular that event organizers are banning the platforms.

The U.S. Open became the latest to do so when, earlier this month, it warned spectators that anyone found livestreaming the event would be kicked out. San Diego Comic-Con also plans to limit use of the platforms next month. Hollywood studios presenting at the convention's legendary Hall H don't want to make it easier for attendees to leak preview footage to the Internet.

Nonetheless, usage is soaring. According to eMarketer, one-fifth of Internet users polled by Horizon Media in April said they had used or were interested in using Periscope or Meerkat. Half of respondents age 18 to 34 showed interest. Not bad for a technology that no one cared about six months ago, right?

If the data proves anything, it's that Twitter has -- for now -- a lock on livestreaming at a time when more users are craving real-time digital connectivity. Monetizing that could lead to huge profits.

How Twitter supports advertisers and brand marketers
As I see it, Twitter has three ways to cash in:

  1. Reaching tailored audiences in real time. Twitter has mechanisms for reaching audiences that already interact with websites. Figuring out who among these lists also uses Periscope shouldn't be too difficult, allowing brands to show their audiences sponsored videos even as users prepare to shoot their own productions.
  2. Using keywords to create opportunistic inserts. Periscope is interactive by nature. Audience members pop in and say hello or ask questions in midbroadcast. What's to stop brands from doing something similar, using pop-up Twitter cards? Advertisers would purchase access to keywords for placing messages in related broadcasts. Think of it as a Twitter-specific twist on Google's search advertising algorithm. 
  3. An AdSense for livestreaming by sharing revenue with hosts. Along the same lines, Twitter could steal from AdSense and offer Periscope users the opportunity to monetize their broadcasts by opening streams to brand advertisers. Every click on placed ads would become cash for the broadcaster.

Twitter's valuation doesn't include monetized streams
For all the promise offered by Periscope and Meerkat, investors remain unimpressed by Twitter. The stock is down over 30% since March 25. (Periscope would become officially available on iOS devices the very next day.)

Is that fair? Not by the numbers I see. One-fifth of U.S. Internet users are already interested in livestreaming via Meerkat and Periscope, which means the current addressable market is 56 million users, or about 24% of Twitter's monthly active accounts. Improvements, usage, and clever marketing could take the ratio much higher by year-end.

Not since Facebook (NASDAQ:FB) pivoted to attract more mobile users has a social platform attracted so much engagement so quickly, and yet Twitter stock is withering under pressure from sellers. That won't last, which is why I'm picking Twitter to outperform in my CAPS portfolio. Think I'm right? Wrong? Let me know by leaving a comment.

Tim Beyers has never, ever tweeted the night away. Have you? He's also a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission and owned shares of Apple at the time of publication. Check out Tim's web home and portfolio holdings or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool.

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