Twitter is running out of time to turn its floundering business around. The company had a terrible quarter to close out 2015, and no reason exists to think its situation will change anytime soon. It lost 2 million monthly active users (MAU), including 1 million MAU in the United States, during the fourth quarter of 2015. And if the downward spiral continues, Twitter could celebrate its 10th birthday next month with fewer users than it had a year before.
This notable loss of users comes at a time of fantastic growth for many of its competitors, including Facebook, WhatsApp, Instagram and Snapchat. The only bright spot in the company's quarter of otherwise notable decline: Twitter's advertising revenue increased by 48 percent year over year to $641 million.
What's perhaps even worse is that Twitter's problems, many of which were addressed repeatedly during its earnings call with analysts on Wednesday, have been woefully apparent for years. For example, the company has been working to improving its lackluster sign-up process for new users since it first went public 27 months ago.
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"We do believe that in the core product there's just a number of broken windows that are confusing people and inhibiting a lot of growth," said cofounder and CEO Jack Dorsey during the call.
However, a broken window is typically a quick and easy fix. That hasn't been the case for Twitter, and the company has swept shattered glass under the rug for years.
Twitter update aims to show 'best tweets first'
In addition to its earnings, Twitter announced a long-rumored product update Users can now opt-in to the new "Show me the best tweets first" feature, which uses algorithms to display the tweets users are most likely to care about, in reverse chronological order.
The update is essentially an expansion of Twitter's year-old "While you were away" feature. "We've applied a lot of the same algorithms to ["Show me the best tweets first"], but they're in reverse chronological order, and they are a whole lot more recent," he said. "It's the fastest way to get back to live without missing any of those tweets that you really wanted to see."
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The change is designed to improve the Twitter timeline while preserving what is core to the company: recency and that real-time, live feeling, according to Dorsey. And the new feature resulted in more tweets, retweets, likes and replies among users who tested it prior to the wider rollout this week, Dorsey said.
Brian Blau, research director at Gartner, says the new timeline feature is a significant departure for Twitter but isn't convinced it will dramatically improve the company's situation. "I don't think any one of [the improvements or new features] is going to do it," he says. "The problems are more complex than that."
During Wednesday's call, Twitter's executive team shared five priorities for 2016 that seem to outline the company's greatest challenges:
- Refine the core service and make all of the pieces of Twitter more intuitive.
- Invest in live streaming video and become a leader in the space.
- Provide creators with better tools to connect with their audiences on Twitter.
- Make Twitter a safer platform that stands for freedom of expression while protecting users from online harassment and abuse.
- Support developers and invest in tools to help them build and grow their businesses.
However, aside from a few moves in the live-streaming video market with Periscope, Twitter isn't really doing anything new and different, and it has been trying to solve the same issues for years. Today, Twitter still has a loyal user base, but an inability to resolve the clear problems each year could prove to be its Achilles heel.
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"I think people generally believe in Twitter," Blau says. "People think that there's value, but they don't really want to use it … It's a real conundrum [for the company]."
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