Musk’s acquisition of Twitter can be described as twists and turns. Although the acquisition is successful, the storm facing Twitter has not stopped.
According to media reports, Musk’s first move after completing the acquisition was to fire a number of executives, including Twitter’s CEO, CFO, and head of trust and security. Musk recently published an open letter on Twitter, promising advertisers that future tweets won’t turn into a “catastrophic scenario” that speaks without consequences.
For Twitter, the company has long faced a daunting challenge in improving profitability, although 2021 revenue of $5.08 billion is up 37 percent, according to Twitter’s reported fourth-quarter and full-year 2021 results. %, and the net loss narrowed to $220 million year-on-year. However, Twitter is still not out of the quagmire of losses, and there is still no radical improvement trend. According to Twitter’s financial report for the second quarter of 2022, revenue was $1.17 billion and a net loss of $270 million was the first year-on-year decline since the second quarter of 2020, which was lower than market expectations.
As a result, Musk fired several executives as soon as he acquired it, apparently because he believed that the original management was primarily responsible for Twitter’s long-term sluggish performance.
However, the problem facing Musk is obviously not something that can be solved by firing executives, but the microblogging model represented by Twitter has long since faded. With the rise of short video platforms, the main production and distribution of information flow has turned sharply. Compared with the graphic mode, the video mode has a lower threshold and is more in line with the information acquisition habits of most people, so that more and more users are gradually “migrating” , causing Twitter traffic to shrink.
Not only that, but short video platforms generally adopt an intelligent recommendation model, with thousands of people and thousands of faces, as well as targeted push of information that users need. Although it has been criticized as easily creating an “information cocoon”, it objectively meets the interests and needs of users, making The user market of short video platforms continues to increase. According to Luo Zhenyu’s GNT concept of “total national time”, while the total amount of Internet information doubles approximately every three years, the total amount of time available to information consumers is almost a constant number.
In other words, a large amount of information, products and services will not be accessible to users for even a second. This will also lead to polarization of information distribution platforms. The more users’ time resources and attention are occupied by short videos, the less user resources can be obtained by traditional graphic and text platforms. Because one of the core business values of Internet companies is User scale, monthly active users, daily active users, etc. Obviously, it is difficult for Twitter, which is farther and farther away from users, to obtain an increase in advertising revenue that is comparable to that of short video platforms.
Whether it is Twitter or short video platform, its revenue mainly depends on advertising. From the perspective of advertising effect, advertisers gradually tend to put on short video platform, because its delivery effect is obviously better than Twitter. If many well-known companies have not advertised on Twitter for a long time, other companies will use this as a reference to reduce their advertising on Twitter, and Twitter will further reduce the presence of Twitter in the minds of advertisers, further weakening the support. The foundation of sustainable development.
This is not only a severe challenge for Twitter, but Facebook, another established social platform, has also undergone a difficult transition. Although Facebook has changed its name to Meta and announced that it will enter the Metaverse, Meta Platforms’ third-quarter net profit decreased by 49% to 4.395 billion In U.S. dollars, revenue fell 4% to $22.714 billion, missing market expectations, which are still expected to be difficult to reverse in the fourth quarter.
The encounters between Twitter and Meta have proved that when there is an intergenerational change in the Internet field, the new generation of information distribution platforms will often strike a dimensionality reduction blow on traditional platforms. For example, the worldwide blow of TIK TOK to Meta, not only users and consumers The new generation of information distribution platforms will actively embrace products that are more efficient and more accurate to meet demand, and advertisers and investment markets will respond in the same way, causing traditional information platforms including Twitter to suffer from performance and stock prices. Double kill.
For Musk, it is necessary to find a new development model for Twitter. This is probably not just to provide users with more free speech space and reduce background interference, but to strive to grasp new trends such as the Metaverse and Web3.0. Otherwise, replacing a few executives and improving Twitter’s free speech rules may only satisfy the needs of Musk or personal expression.
Financial commentator Bi Ge
Editor Xu Chao proofreads Lucy