Though it's popular with an in crowd of entertainers, politicos and hipsters, the microblogging service is having a hard time getting regular people to join. That's a problem, a big problem.
Terry CollinsStaff Reporter, CNET News
Terry writes about social networking giants and legal issues in Silicon Valley for CNET News. He joined CNET News from the Associated Press, where he spent the six years covering major breaking news in the San Francisco Bay Area. Before the AP, Terry worked at the Star Tribune in Minneapolis and the Kansas City Star. Terry's a native of Chicago.
Twitter needs more people to tweet. In its desperation to make that happen, it's taking a page from old cookbooks on how to make pasta: Throw everything against the wall and see what sticks.
So far not much is sticking, and that's bad news for Twitter because it needs to win over people who have little interest in tweeting. In July, it reported 316 million users were actively tweeting, just a 3 percent rise from three months before, and it warned investors not to expect " sustained meaningful growth." In October, the San Francisco-based company said the number of active users grew by a meager 1 percent.
Twitter's executives, including CEO Jack Dorsey, admit they've got a problem. The service is confusing, which makes it hard for tweeters to find other people and topics to follow. It's also viewed as a hotbed of abusive behavior, which intimidates both new and existing users.
Twitter also knows it needs a face-lift that will make it more visually appealing in a way that encourages regular people, and not just an in crowd of entertainers, politicos and hipsters, to use the service.
The problems became apparent Wednesday when Twitter announced it had zero growth in the number of monthly active users during the last three months of 2015. Shares fell more than 10 percent in after-hours trading.
"Twitter will be 10 years old in March," the company said in a 17-page letter to shareholders.
"A decade!" the letter read. "Over that time we have had an incredible impact on culture and society, in a way that none of us ever dreamed of when we started, and have built a thriving business. Our work now is to set ourselves up to have even greater impact over the next 10 years. We are confident we will."
Twitter earnings tank on no growth
Twitter has made several attempts to appeal to new users. Dorsey and company added a feature called Moments in October, which points users to curated tweets, videos and images of events as they happen. Twitter thought Moments could turn casual users into active tweeters. So far, though, that hasn't happened (see meager 1 percent note above).
In November, the company also replaced its longtime star-shaped icon (Twitter's equivalent of Facebook's thumbs-up) with a heart. The reaction: meh.
Then came last month's rumor that Twitter may expand its signature 140-character limit per message to as much as 10,000 characters, or 2,000 words. Investors weren't happy with the idea of long-form tweets and sent the shares down 3 percent on the rumors. But that was nothing compared with last week's outcry, and accompanying hashtag #RIPTwitter, over speculation that Twitter might show tweets it thought you'd want to see instead of just showing what the people you're following are tweeting as they post their messages. It got so bad that Dorsey took to Twitter to address the rumors.
Even though longtime users aren't happy with some of his tweaks, Dorsey can't afford to stop experimenting. Twitter needs to find new ways to win over more of a mainstream audience, because advertisers demand it. (The company gets about 90 percent of its revenue from ads.) Twitter is expected to grab 9 percent of all ad spending over social networks this year, while Facebook -- which has 1.59 billion active users -- will capture 65 percent, according to eMarketer.
"For companies like Twitter, the expectation is that they can grow over time, gain new users and make the old ones happy," said Gartner analyst Brian Blau. "[But] Twitter is not moving forward when everybody else is growing, which makes it look like the business is failing. It's pretty clear that Twitter hasn't attracted new users for a pretty long time."
So you could sum up the company's catch-22 in a tweet: Twitter won't grow until it reaches a mass market, and it can't reach a mass market if it doesn't grow.
In its letter to shareholders, Twitter listed five priorities for the year. First, it will "fix the broken windows and confusing parts ... that we know inhibit usage and drive people away." The company will also emphasize live streaming video, help entertainers and other "influencers" connect with fans, encourage developers to build add-on features and do more to make the service feel safer.
"At the center of everything is live," Dorsey said Wednesday in a conference call. The company has "a relentless focus on making this great and refining the core service."
Twitter on Wednesday said it had a loss of 13 cents a share on revenue of $710 million during the fourth quarter. Profit that adjusts for some costs was 16 cents a share, beating the estimates of analysts polled by Reuters, who expected profit of 13 cents on sales of $709.5 million.
It doesn't look like things will be looking up for Twitter anytime soon. The company forecast revenue of $595 million to $610 million in the first quarter of 2014. Analysts had expected $624.2 million.
Apparently, not that many people are eating pasta.