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75% of World’s Mobile Data Traffic To Be Videos By 2020

Videos are a powerful and spontaneous way of sharing life events and news with others. Facebook and Twitter are both aggressively pushing videos both as marketing and a sharing tool. By allowing users to record and broadcast their own videos via mobile cameras the companies are challenging the popular notion that videos need to be shot professionally. The popularity of live videos is likely to increase in the coming years. In fact, Cisco forecasts that three fourths of the world’s mobile data traffic will be video by 2020. A live feature can increase user engagement tremendously, since it encourages users to log on to the platform at a certain time and for a certain duration to witness the entire event live. If Twitter is able to increase the number of users sharing live videos on its platform, this should have a positive impact on its user engagement levels. According to our estimates, the number of timeline views per U.S. monthly active user for Twitter will increase gradually from around 200,000 in 2016 to 209,000 by the end of our forecast period.

This metric is a key driver of Twitter’s valuation and a significant change in the number of timeline views can have a material impact on our price estimate for the company. For instance, there can be a nearly 20% upside to our price estimate if these views increase rapidly and reach nearly 300,000 by the end of our forecast period.

Twitter is struggling to gain users and increase their engagement on its platform, which in turn impact advertising revenues of the company. The popularity of live videos is a trend the company can tap into to increase user engagement. While this might potentially mean the end of Periscope, integrating this feature with the Twitter app is a logical decision that can simplify broadcasting videos on its platform. However, whether this will increase user engagement remains to be seen, given that Facebook and Instagram (with a larger user base) both offer similar feature and compete directly with Twitter.