On Wednesday Twitter has published a new vacancy engineer who will work on the creation of a platform with a subscription called Gryphon. While Twitter did not disclose details, analysts shared their assumptions about a new service that could bring another revenue stream in addition to ads.
Shares of Twitter ( TWTR), increased by 10.5% since the beginning of the year, increased by 7.34% on Wednesday on plans to launch a platform subscription Gryphon.
On your website under vacancies, Twitter posted an ad looking for “senior engineer of division”.
Here is the message of the company: “We are a new team under the code name Gryphon. We are creating a subscription platform that could be used by other teams in the future. This is the first time in Twitter! Gryphon is a team of web engineers who work closely with the team Payments and team Twitter.com. We are looking for a full-fledged engineer, who will lead the work with the client for payments and subscriptions, which will appreciate the cooperation just as we are, and can act as a liaison for engineering team. This is a great opportunity for all participating teams!”
Twitter gave no explanation, however, investors welcomed the news, expecting that the subscription service will help to increase income and reduce dependence on advertising, which accounted for more than 84% of all revenues of the company.
“Anyone who has an advertising model needs to consider a subscription, but anyone who has a subscription model, should consider is,” – said in an interview with FOX Business Michael Pachter, analyst at Wedbush Securities in Los Angeles, adding that the product subscription is more of a retention tool than anything else.
Pachter speculated that the platform can be built following the example of the service Hulu, the version of which is free and provides paid subscriptions for a version without ads.
The analyst said that companies that have both models usually receive “slightly more” from the people who pay. He believes that most people prefer to deal with ads, not to pay.
Other analysts referred to the fact that the leadership of Twitter, probably for many years considering the idea of creating a subscription service for advanced users. In 2017, the company sent out a survey to ascertain the number of users who are interested in a more advanced, paid version of the toolbar TweetDeck.
TweetDeck was originally designed as an independent application, later it was acquired and integrated into the main Twitter platform and was available on different devices.
TweetDeck Twitter calls its “most powerful tool for tracking, organizing and collaboration in real time.”
Tools TweetDeck allow you to manage multiple Twitter accounts, to schedule tweets for future publishing, to create collections of tweets and more.
Such a tool, if it will be complemented by content from different news outlets (that sell a paid subscription) can help marketers, journalists or other professional users to quickly find out what is happening in their area and in the world to obtain more understanding and to see the wide range of what people are saying on Twitter.
In the case that Twitter will enter into partnership agreements with news publications and magazines, the company will increase its competition with Facebook (FB) and will compete with Apple News + (AAPL).
Mark Shutovich, an analyst at Rosenblatt Securities, has confirmed that the subscription service Gryphon can be aimed at “providing valuable data and Analytics, which can be interested users a professional commercial environment.”
Shutovich believes that the original common market may be less than about 10 million users. How this will be profitable for Twitter will depend on the value of content, cost of subscription and method of payment processing, given that the registration of the users through the payment system Pay Apple, for example, will Twitter cost 15%-s ‘ Commission.
Creating a service with a subscription should go in favor of Twitter, which is struggling to increase their income as due to problems with the release of promotional product and due to the impact of the pandemic COVID-19 on the expenditures of the advertisers.
In the first quarter, daily active Twitter users (mDAU – daily users are able to see advertising on Twitter) grew by 24% in the year to 166 million. However, total revenues grew only by 3% to $808 million, the lowest increase in the last two years. Advertising revenues grew less than 1% to $682 million compared to the same quarter last year.
The increase last week shares of Twitter, and Snap (SNAP), was based on the incidence of competitor Facebook, which faced a boycott by advertisers because of the company’s policy against hate speech and racial discrimination.