Elon Musk’s X tries to prove that pivoting to video is a smart strategy rather than a punchline

If in doubt, pivot to video.

Over the years, many struggling media companies have bet their futures on online video as a sort of Hail Mary after everything else has failed to turn their businesses around. The strategy, at one point, was so common and, invariably, such a failure, that it became a running joke among Silicon Valley insiders.

That brings us to yesterday, when Elon Musk’s X, the longtime home to brief text-based musings, and more recently, a cratering ad business thanks to its owner’s many missteps, declared that it had become a “video-first platform.” What the service, formerly known as Twitter, means by that statement wasn’t explained. But it suggests that X considers video to be a top priority, if not the top priority, and that many users are already visiting specifically for it. As proof, the company asserted that eight out of 10 user sessions on the service involve people watching videos.

It’s easy to guess why Musk, who paid $44 billion for X last year, only to destroy 71.5% of its value, by one measure, would want X to be “video-first.” It’s the same reason why countless media companies—Yahoo and a number of news outlets circa 2015, for example—bet their futures on video. Video ads command much higher prices than the mere pennies, or fraction of pennies, that individual text ad impressions generate.

But if video was a salvation, it probably would have saved the many media companies of yesteryear that piled on. Instead, it turned out to be yet another misguided strategy after the expected riches failed to pan out—and now the source of a tech industry punchline.

The wishful thinking for X continues when you consider the problem of YouTube, TikTok, and Instagram, which already dominate free online video. They’re each helped by armies of creators who churn out clips watched by billions of users combined. X, meanwhile, is a relative newcomer to this space and is so far behind that it’s practically invisible (ironically, the pre-Elon Twitter once owned Vine, a short video app considered a progenitor to TikTok, but the company shut it down in 2017). Yes, X can fork over bucketloads of money to video creators in hopes of eventually catching up, but such a strategy has limited financial upside given that many big-time advertisers want nothing to do with the company and its owner.

Nevertheless, Musk is charging ahead with even more video-related ambitions. Last week, he shared his vision for creating a livestreaming service for video game play, much like Amazon’s Twitch. But again, he would be making a late entry into the free streaming niche, whose underlying value proposition—free—doesn’t exactly scream financial bonanza. In fact, in a sign of its business shortcomings, Twitch said today that it would cut 500 jobs, or 35% of its staff, after two rounds of layoffs last year.

This doesn’t mean X should abandon video. It could very well be a decent business, just probably not a big enough one to justify the company crowing that it’s now a “video-first platform.”

And in general, when you hear about a company pivoting to video, be sure to pivot to being skeptical.

Verne Kopytoff

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NEWSWORTHY

AI voices. SAG-AFTRA, the labor union representing Hollywood actors, has signed a deal with AI voiceover studio Replica Studios that sets terms for the use of digital voice replicas in video games, Variety reported. Union members went on strike last year in part over protections around AI. 

Amazon cuts. Amazon cut hundreds of jobs in its Prime Video and MGM Studios divisions, CNBC reported. The news follows two years’ worth of mass layoffs at the company and comes the same day as Amazon-owned Twitch confirmed it will cut 500 employees.

Model 3 in America. Tesla launched the restyled Model 3 in North America, featuring a new rear display for backseat riders and a longer travel distance on a single charge, Reuters reported. The roll-out follows months of sales for the sedan in Europe and China.

IN OUR FEED

“The nice thing about what Adobe did is we said, ‘We’re sidestepping the whole copyright issue by training on licensed works.’ So no matter what happens in those class action lawsuits, our model is fine. We don’t have any concerns.”

Adobe general counsel and chief trust officer Dana Rao said in an interview with the Verge about court cases surfacing against companies that have trained their AI models on copyrighted materials. Adobe’s Firefly trained only on Adobe Stock content.

IN CASE YOU MISSED IT

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The European bureaucrat who sends a chill through Big Tech just said she’s looking closely at Microsoft’s relationship with OpenAI, by Paolo Confino 

Bryan Johnson’s anti-aging Blueprint ‘basics’ are now officially available to the public for $333 a month—but you’ll need the right ‘vibe’ to join the ‘fun’, by Orianna Rosa Royle

Apple’s VP of finance is the new CFO at Sonos. Here’s what prepared her for the role, by Sheryl Estrada

Walmart experiments with generative AI-powered search tool, expands drone services for customers, by the Associated Press

Cheap EVs help China leapfrog Japan as the world’s largest car exporter—while foreign giants like VW and GM sink in the lucrative Chinese market, Nicholas Gordon

Hacked SEC Twitter account falsely posts agency approved Bitcoin ETFs, by Leo Schwartz

​​2023 was a worse year for corporate bankruptcies than 2020—and the highest since the GFC—after a stunning 72% surge, S&P Global finds, by Will Daniel

BEFORE YOU GO

Microsoft’s China lab. Microsoft is facing questions from U.S. officials about its 800-person AI research lab in Beijing as tensions between the U.S. and China mount, the New York Times reported, citing current and former Microsoft employees. The company’s top leaders, including CEO Satya Nadella and president Brad Smith, have reportedly discussed what to do with the lab over the past year. 

The lab, which opened in 1998, has spearheaded Microsoft’s work in speech, image, and facial recognition. Bill Gates previously called it “an opportunity to tap into the deep pool of intellectual talent in China.”

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