A report from Bloomberg was published today saying that Disney has hired a financial advisor to look into a bid to buy Twitter.
It certainly came as a surprise to many, including investors, and for good reason. Why is an entertainment company like Disney looking to buy a social media company like Twitter? Bloomberg’s report cites a convincing argument on why a purchase isn’t out of the question.
The answer extends beyond Disney CEO Bob Iger and Twitter CEO Jack Dorsey (who is on Disney’s Board of Directors) being friends.
Disney creates content for us on a variety of different platforms, but they mainly come in the visual, video formats. That content eventually ends up in front of us through TV, online video sites like YouTube, and movie theaters. In recent weeks, however, Twitter has made it clear that it could be among the video delivery platforms out there.
Sports fans really enjoyed Twitter’s recent live streaming of sports matches. Nevertheless, Twitter has failed to capture video audience compared to Snapchat and Facebook. The overall consensus among analysts, however, think that Twitter is very much in an identity crisis trying to figure out how to serve an ever-growing online audience.
At the same time, Disney creates amazing, award-winning video content. We all love the Avengers, The Dunphys on Modern Family, and even our play-by-play sports analysis at ESPN, but even the best content needs to have a strategic distribution strategy.
Disney already made a leap into that direction by purchasing a minority stake in an online video distribution platform/software created by Major League Baseball. Still, Disney’s way of distributing content especially through their main revenue driver of cable subscriptions is losing popularity due to people’s preference to consume their content online.
That’s why Disney purchasing Twitter makes sense. Twitter would get some of the world’s best video content and Disney would get Twitter’s vast online audience to deliver their ad-supported content to without much effort.
But let’s face it: Twitter would be getting the better part of the deal. Their falling stock price and their identity crisis with us online users could be a death sentence for them within the next few years.
It’s good to remember that Disney’s buy wouldn’t really fix any of those things that Twitter lacks. Instead, Twitter would continue to live another day not as a micro-blogging platform, but Disney’s exclusive video distribution service.