Twitter has a new business strategy — become TV — and on Tuesday, when the company reports Q2 earnings, it will have a chance to pitch that new business strategy to its most vocal and important critic: Wall Street.
For the past month or so, Twitter has been scooping up digital streaming rights from anyone who will hand them over — that includes deals with the NBA, Bloomberg, CBS and MLB Advanced Media, just to name a few.
Those deals, in aggregate, have quickly made Twitter a kind of 21st century digital TV network, a place where you may one day watch live video programming for sports and politics and entertainment just like you do on pay television today. The big difference is that instead of paying Comcast or Dish to watch these shows on your big screen at home, you watch over the internet, on Twitter, for free.
The question is whether or not this approach will help Twitter boost its user numbers. Or make more advertising revenue. And the answer to those questions will likely determine how long Twitter stays an independent company, or, and probably more likely at this point, who will buy it and for how much.
Tuesday will be the first time since Twitter announced a streaming deal with the NFL back in April that we’ll get a chance to hear its top executives explain why this plan will work. And the idea might take some selling.
That’s because becoming TV is hard. The most obvious challenge is getting content people will actually watch. Streaming rights are expensive, especially for the kinds of shows Twitter wants, like live sports. Very little of what Twitter has secured so far is must-see television, and some of it is made-for-Twitter television, which means we have absolutely no idea if it will be entertaining.
The second challenge will be convincing advertisers to hand over money for a product we haven’t really seen yet. The company seems to be having success selling ads against some NFL games it will stream later this fall, but the NFL is easy to sell. Will it be able to sell ads alongside a Twitter-only NBA pregame show? Or random college sports streams from the Pac-12? We don’t really know.
And we probably won’t really know for a few more quarters. But Tuesday is Twitter’s chance to convince people this new approach can actually work.
The earnings are set to drop just after market close on Tuesday. Analysts are looking for profit of 10 cents per share on revenue of roughly $607 million for the quarter, according to Yahoo Finance. That’s on the high end of the company’s Q2 guidance, and would represent a 21 percent increase over the same quarter last year.
Twitter’s user growth is expected to be modest (and has been basically nonexistent for the past few quarters). RBC Capital’s Mark Mahaney expects the company to add one million new users on the quarter, jumping to 311 million in total. Scott Devitt at Stifel is projecting three million new users.
This article originally appeared on Recode.net.