Twitter, Inc. Management Talks Vine and Periscope

By Daniel

Amid all the worries about Twitter's user growth problem, and following the company's worse-than-expected guidance for its important fourth quarter, one key topic discussed by management during the company's most recent earnings call has been mostly overlooked: Vine and Periscope. While both social networks may not be generating meaningful revenue for the company today, it's important for investors to check in on these growing social networks. Fortunately, both services continue to look promising.

Live streaming app Periscope is owned by Twitter. Image source: Periscope.

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Vine and Periscope will be businesses, but not yetWhen asked about how management foresees the impact of revenue from Twitter-owned stand-alone products Vine and Periscope, Twitter CFO Anthony Noto refused to make any specific forecasts during the third-quarter call, but he did say the company "of course will be looking to turn both of those into businesses."

Noto was particularly excited about Periscope, saying, "Periscope has a really significant and really exciting roadmap coming up, which really stretches the boundary of what it means to see an event live and to see that unfold."

But, for now, Noto said the company will focus on the "end-to-end experience around both products ... making sure we're giving creators a whole lot more tools to express themselves in a more creative way."

By exercising patience in getting to significant monetization of these platforms, Twitter is taking cues from Facebook , which has taken its time in bringing meaningful levels of monetization to WhatsApp, Messenger, and Instagram.

"This may sound a little ridiculous to say," Facebook CEO Mark Zuckerberg said during the social network's 2014 third-quarter earnings call, "but for us, products don't really get that interesting to turn into businesses until they have about a billion people using them."

If Facebook's successful practice of focusing intensely on the user experience during the early days of its social products, and worrying about meaningful monetization later, is any indication of how Twitter's decision to do this with Periscope and Vine will work out, this is a good move by management.

Video: Twitter's next frontier?Video across Twitter's social platforms is exploding, and video-focused Periscope and Vine certainly represent key drivers to this growth. Together, between Twitter, Periscope, and Vine, Twitter Chief Operating Officer Adam Bain said the company's native video views were up an incredible 150 times during the past six months alone.

A new feature for Vine that makes it easier for users to find similar vines is one feature that is driving greater video consumption for Twitter's social platforms.

While video isn't meaningfully monetized on Vine or Periscope yet, the company's success with video on Twitter may provide a preview of the potential for monetizing these platforms. Just how important is video to Twitter's business? The company said during its third-quarter earnings call that its 58% year-over-year growth in revenue during the quarter was driven primarily by strength in the Twitter's new video features.

Teasing what's to come While Dorsey wasn't very specific, he teased some big updates ahead for both Vine and Periscope.

Noting big changes are coming to Twitter in regards to the way the company communicates the value of the service and the tools it gives to users, Dorsey said these themes would also carry over to Vine and Periscope, too.

Dorsey continued: "And that's not just Twitter, but also our properties like Vine and Periscope, how we're giving creators more tools to be more creative and to express themselves in a different way and giving the folks on Periscope even more reach in order to share what's happening around them in a very interesting and unique way, which is live streaming."

Facebook, like Twitter, is a big believer in its other social platforms beyond its native Facebook app. Zuckerberg said last year that, over a five-year time frame, the company believes its Messenger, WhatsApp, and Instagram apps can "start to become meaningful businesses in their own right."

Consider the growth of Facebook's Instagram, which the company acquired in 2012 and now has over 400 million monthly active users -- more than Twitter's 320 million. Instagram's monthly active user count has more than doubled in less than two years. And now Facebook is already beginning to monetize the platform and is seeing promising early results with advertisers.

Twitter's Vine and Periscope may never catch up with Instagram, but they won't need to for Twitter to realize value from these services. Even a fraction of Instagram's success would probably make continuing investments in these platforms worthwhile.

Management's optimistic update on Twitter's video-driven platforms, Vine and Periscope, is encouraging. Going forward, investors should keep an eye on these platforms, hoping the company turns them into significant businesses. But investors should be patient.

The article Twitter, Inc. Management Talks Vine and Periscope originally appeared on

Daniel Sparks 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.

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