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Hot Takes: Comcast and Twitter

Lots of earnings reports and other news coming out this week and I wanted to share some thoughts.

Comcast:  A lot going on with them today. They’ve put in a competitive bid for the SkyTV assets in the UK that Fox was going to sell to Disney as part of the giant deal those two have got going on.

This is puzzling to me. I can understand why Comcast would want to take over Sky–access to European markets for their NBCU content–but it would seem that a far better path to that would be to make nice with Disney over Hulu, have Hulu be the app that Disney (who would already own two-thirds of Hulu anyway, to Comcast’s one-third) would launch in Europe featuring both Disney and NBCU content, which would make it a far more compelling offering to European audiences anyway.

The fact that Comcast lost out to Disney for the overall Fox deal, despite having put in a much higher bid (Fox was justifiably worried about regulatory issues with Comcast) might indicate that there’s likely some ego involved here, and there’s also the distinct possibility that Comcast doesn’t want to be at the mercy of Disney in terms of how their shows are marketed and distributed in Europe, but I’m still a bit puzzled as there seem to be other, better alternatives.

On the plus side, Comcast had a great quarter, owing, as they are the first to admit, to big bumps from both the Winter Olympics and Super Bowl. That said, some interesting stats:

  • They lost 96K pay TV subs in Q1 2018, but gained 379K broadband subs, and revenue for the broadband unit grew 8%. (This makes sense as broadband is a much more lucrative business than pay TV for an MVPD, especially in cases where users are paying to upgrade their speed–that costs the MVPD almost nothing and they can charge an extra $10/month for it.)
  • Those 96K pay TV subs only accounted for around 0.5% of all their TV subs. (This is important because you can bet the Silicon Valley trade press will be trumpeting that “Comcast loses 100K subs! TV is dead!” Half a percent is a rounding error for most businesses.)
  • Overall, profit growth was up 21% YOY (In other words, don’t get your violin out for them just yet, despite the recent hammering they’ve taken from Wall Street.)

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Twitter:  Twitter had a good quarter Wall Street-wise, as they recording their second consecutive quarter in the black, with net revenue of $61M. Much of that profit came from international deals, Japan in particular. Similarly, while Twitter added 6 million new MAUs (Monthly Average Users), 5 million of those newcomers were from outside the U.S.

The Holy Roman Empire And Other Twitter Problems:  To rehash our problems with Twitter, at least in the U.S.: their audience is way too fragmented to be of value of anyone who is looking to chase a group other than one that indexes high on Twitter. So if you’re looking to promote a show like the CW’s “Riverdale” then Twitter is great because a goodly number of hardcore “Riverdale” fans hang out on Twitter. But if you’re looking to reach teenage girls in general, then Snapchat, where well over half of them will have accounts, is going to be a much better bet than Twitter, where most of them don’t have accounts and the ones that do are generally on the platform to discuss something in particular, e.g., “Riverdale.”

Twitter just looks too much like old maps of the Holy Roman Empire, with lots of tiny dukedoms and principalities that have limited crossover. It’s been our experience that most people become aware of well-publicized tweets because they’ve been republished on other platforms, not because they saw them initially on Twitter (that includes Presidential tweets) which further reinforces the notion that there’s no real reason to be on Twitter, that it’s not the kind of mass audience app where you’ll find most of the people you know in real life.

Then there’s the fact that Twitter tends to attract the loudest voices, people who aren’t afraid to speak out in public. That’s why we’re frequently incensed when lazy reporters pull tweets into their articles to show what “people” are thinking rather than actually go out and try and get quotes. Because what’s being said on Twitter is indicative of nothing more than “what people on Twitter”–people with strong, frequently over the top opinions–are saying. Not “people” in general, who tend to be more circumspect.

There’s also the numbers thing. Unlike other social media platforms, Twitter encourages users to have multiple accounts (one for work, one for personal, one for hobbies and fandoms, etc.) That would seem to greatly inflate their MAU stats, especially since each new account requires a new email address, so you can’t tie them all to the same user. We’d guess that somewhere between one-quarter and one-third of Twitter accounts are second or third accounts for the same user. And then there are all the bots: despite a recent crackdown, there are still hundreds of companies willing to sell Twitter users for next to nothing. (Just do a Google search for “Buy Twitter followers”.)  So subtract another one-fifth to one-quarter for that.

Global Warming: One key thing to remember about social platforms is that their performance and image in the U.S. and other western countries is often different than it is in the rest of the world. So that you find articles like this about how misleading Facebook posts are wreaking havoc in developing countries where there is no mainstream media and people really do rely on Facebook as a major news source and a place to discuss serious issues. While we stand by our prediction that Facebook is like a slow-leaking balloon in the West (think Yahoo), it’s still a major force in much of the rest of the world, and it still has plenty of room for growth there before the inevitable contraction begins.

Similarly, Twitter may have peaked in the U.S.–pretty much everyone who has thought about joining Twitter has already done so. But in other parts of the world, Twitter has much more room for growth. Japan, for example, appears to be a huge market for the platform and 18% of last quarter’s profits alone came from that country.

Point being, we need to look at all the social platforms with bifocals, so to speak: how are they doing in the U.S. market, and how are they doing in the rest of the world, where there’s still room for growth and where social media assumes much greater importance as both a media platform and as a communications tool.