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Comcast Corporation (CMCSA), Google Inc (GOOG): Will Twitter Become the Next Big Player in Online Media?

The evolution of Hulu

Meanwhile, Twitter’s pending partnerships with Viacom and Comcast Corporation (NASDAQ:CMCSA) suggest that the company is intent on producing a Hulu-like experience on Twitter. Since Hulu is jointly owned by Comcast Corporation (NASDAQ:CMCSA), News Corp (NASDAQ:NWS). and Disney, Twitter is already more than halfway there, since it already has existing partnerships with two of those companies. Therefore, I believe that Twitter does not intend for its streaming video service to be a competitor to Hulu; rather, it wants to make it an extension of Hulu’s services and business model.

Whereas Hulu users are passive, watching the streaming shows and then possibly commenting afterwards, streaming Twitter video would encourage user engagement via hashtags and scrolling feeds of recent tweets. Similar to its coverage of live sporting events, Twitter could allow viewers to interact with each other while viewing the same show, making online viewing a much less solitary experience. Advertisers could also use hashtags to advertise more products during the show, rather than through the intermittent ads Hulu employs.

Music business

Twitter’s push into streaming video also accompanies its expansion into the streaming music business. Twitter is planning to launch a special mobile app that allows users to stream and share music via its site. Unlike higher-bandwidth video, Twitter intends for this music hosting service to be on site. To aid this transition, Twitter recently acquired music discovery service startup We Are Hunted.

This is potentially bad news for Google Inc (NASDAQ:GOOG), which recently acquired Spotify for $4.2 billion to aid its upcoming launch of its subscription-based YouTube Music service. This is even worse news for Pandora Media Inc (NYSE:P), the largest online radio station service, which now stands to be marginalized even further by both Twitter’s and Google Inc (NASDAQ:GOOG)’s music services.

Challenging Amazon.com, Inc. (NASDAQ:AMZN) and Netflix, Inc. (NASDAQ:NFLX)

Although Twitter’s current media-based efforts all revolve around live time-sensitive tweets, its newly forged partnerships could upset the balance of the movie streaming market. Considering that Viacom owns Paramount Pictures, and NBCUniversal owns Universal Studios, there is a good chance that these two studios will begin offering streaming movies on Twitter’s mobile app, once it is properly upgraded to accommodate more mobile media. These tactics could disrupt Amazon.com, Inc. (NASDAQ:AMZN) and Netflix, Inc. (NASDAQ:NFLX)’s current efforts to control the streaming media market.

The Foolish Bottom Line

In my opinion, Twitter’s extensive partnerships point to three exciting letters for investors: IPO. A privately traded company usually doesn’t go to such lengths to prove to the public that it can generate revenue with a sustainable business model unless it plans to go public soon.

However, considering the disastrous Facebook Inc (NASDAQ:FB) IPO last year, Twitter obviously wants to take its time and build up a reliable business first. Which brings us to the last question – how much would Twitter, which generated $350 million in annual revenue in 2012, be worth in today’s market?

Twitter’s $800 million round of financing in 2011 valued the company at roughly $8 billion. Therefore, it would make sense that given Twitter’s revenue growth and expansion over the past year, the company could be valued at nearly $10 billion today, about half the size of LinkedIn Corp (NYSE:LNKD).

So what do you think, dear investors? Does Twitter have a viable media and advertising based business model that will allow it to successfully go public in 2013, or is this simply another awful Facebook Inc (NASDAQ:FB) IPO in the making?

The article Will Twitter Become the Next Big Player in Online Media? originally appeared on Fool.com and is written by Leo Sun.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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