Apple Should Buy Twitter
There have been many rumors about Apple buying Twitter in the past. But I’ve never quite understood, why Apple, a hardware manufacturer with high profit margins and virtually no presence in the social networking space, should buy Twitter, a social service that is not profitable and doesn’t provide utility for Apple’s core-business.
But this has changed in the last few months. While Apple tries to get a foot in the door in the TV and content industry, Twitter is shaping into some kind of new TV and media service. This is the first time that an acquisition of Twitter would make sense for Apple. Here’s why:
1.) Apple wants to build a TV/Streaming Service
According to some rumors, Apple has been hard at work preparing a subscription service to offer unbundled TV channels but content providers are unwilling to strike a deal with Apple.
Besides that, Apple is looking to produce content themselves with shows like Planet of the Apps and Carpool Karaoke. These shows will likely be distributed through Apple Music to promote the service. And also because Apple currently has no other subscription based media service.
Twitter on the other hand has built a striving live streaming service in the last quarter. According to its quarterly report, it has streamed over 800 hours of premium live content to over 45 million viewers. 55 % of these are under 25 years old which means this is an attractive user base. Twitter has both: the technical infrastructure and a growing user base for live streaming. Furthermore it is working on massive content deals to provide its viewers with 24/7 programming on a live streaming channel.
2.) Apple as a News Service
As Twitter CEO Jack Dorsey puts it:
“We excel when something is happening in the world.”
And it is true. Twitter is an amazing platform for breaking news. When something is happening, you’ll hear it on Twitter first. From journalists, CEOs, politicians and everybody on this planet who uses Twitter to get his/her voice heard. Everybody can be a real-time reporter and even news outlets are increasingly turning to Twitter for real-time information. There is hardly a breaking news story without an embedded Tweet. Twitter is in the heart of the news cycle: As a source, a distribution channel and a medium to spread your own voice.
Compare this value proposition to Apple’s description of its News App on Apple.com:
News collects all the stories you want to read — so you no longer need to move from app to app to stay informed. And with a completely reimagined For You tab, it’s easier than ever to find the stories that matter most to you. News also features breaking news notifications and subscriptions to some of your favorite publications.
It seems like this is a perfect match for Apple to strengthen its news offerings and provide users with a tailored real-time information.
3.) Apple Encourages Users to Produce Content. But it Lacks a Platform.
With the release of the Clips app last month, Apple obviously doesn’t want to miss out on the recent trend of small story-like video clips, which are currently popular on Snapchat and Instagram. Clips is easy and fun to use and content created with the app looks more professional and elaborate than Instagram Stories.
But Apple is missing a crucial feature: The distribution aspect. It does have sharing via iMessage, but this is not enough. Just look at how people are using Instagram Stories: Not to send their videos to private contacts, but to share them with a wide audience. And Apple doesn’t control such a platform. Users currently have to resort to other services.
Twitter has no competing product to Snapchat or Instagram’s Stories. With Apple’s Clips it would have. And Apple would have a platform for sharing and distribution.
4.) But the Business Model makes no sense …
Apple has tried ad-based business models. Its previous initiatives (iAd, ..) failed and Apple has since declared, that protecting the user’s privacy is anyway more important than earning money from targeted ads. The funny thing is: Twitter also hasn’t figured this out yet. Its recent quarterly results even showed declining revenues compared to the same quarter a year ago.
Here’s a though experiment: How about, they would revamp the business model of Twitter around premium subscriptions: A free, ad-based service with access to some live videos plus the whole Twitter. And a subscription with access to 24/7 premium streaming video programming and original on-demand content as well as an ad-free Twitter experience. Such a service would be more in line with Apple’s philosophy of doing business and it could also help Twitter to reach profitability.
To summarize: Apple buying Twitter would not make sense on the same level as (for example) Google buying Twitter. But if Apple tries to get into these industries, it would make sense to kickstart its efforts with such an acquisition. At least this is the first time I see some opportunities for Apple.
