Twitter Inc (NYSE: TWTR) has made several major deals in recent quarters to stream live sports content on its platform. This week, Twitter completed a new deal with Blizzard Entertainment’s Overwatch League to stream esports video gaming content through the end of 2019, but analysts say adding expensive streaming content hasn’t generated the user growth Twitter investors need.
Twitter said its new deal with Overwatch league will include a live weekly highlight show and near real-time video highlights of every match of the regular season, playoffs, Grand Finals and All-Star Weekend.
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“Overwatch League is one of the most Tweeted-about esports leagues on the platform, and this partnership will bolster that conversation,” Twitter head of gaming partnerships Rishi Chadha says.
In addition to the new deal with Overwatch League, Twitter has had previous esports streaming partners such as Activision’s Call of Duty World League and ESL.
Newzoo estimates that the global esports economy will grow by 38 percent in 2018 to $905.6 million, and that the global esports audience will reach 380 million this year. According to Statista, North America accounted for just 13 percent of the global esports audience in 2017, while Asia represented 51 percent of viewers.
Twitter is hoping that its aggressive spending on streaming content will help boost its subscriber numbers and engagement, but its second-quarter earnings report revealed that user growth has stalled. TWTR stock tumbled 21 percent after the company reported a 1 million-user drop in monthly active users in the second quarter.
Morningstar analyst Ali Mogharabi says Twitter’s huge video content deals don’t seem to be producing the intended results.
“We think Twitter’s biggest move on this front was live-streaming Thursday night NFL games during the 2016-17 season,” Mogharabi says.
Twitter has also inked content deals with Major League Baseball, Major League Soccer, the All England Tennis Club, the Canadian Football League and the National Women’s Hockey League.
“Agreements similar to these should increase user interaction, but we are uncertain that they will also increase the number of Twitter users, which is vital to attracting more advertisers,” Mogharabi says.
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Even after the earnings drop, Mogharabi says TWTR stock is still overpriced given user growth uncertainty and fierce competition in social media and video streaming.
Morningstar has an “overvalued” rating and $26 fair value estimate for TWTR stock.
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Twitter Inc (TWTR) Makes Its Mark With Esports Streaming originally appeared on usnews.com
