Since its launch in Feb 2015, Meerkat was completely dependent on Twitter as its users needed Twitter accounts to log in and stream live video to their followers. Live video streaming is gaining traction in social media, especially in the marketing arena, as it can effectively bridge the gap between brands and their customers in a hassle-free way. This can be a boon for social media companies as live streaming can significantly boost their user engagement thereby pulling more advertising revenues.
Prior to the launch of Periscope, Meerkat had become immensely popular among Twitter users, so much so that Twitter had limited the access of its social graph function for Meerkat after launching Periscope. The restriction became a significant hurdle for Meerkat as it prevented automatic live video-stream notifications to Twitter followers.
Now Meerkat is collaborating with Twitter's strongest rival. According to a recent update, Meerkat users can log in through their Facebook account. Additionally, they will also be able to send notifications through Facebook regarding upcoming streams.
Furthermore, Facebook's support will enable additional features like address book scanning and matching that will help Meerkat users to quickly expand their network by accessing their Facebook contacts (this function is similar to Twitter's social graph). Meanwhile, rumors about Facebook acquiring Meerkat are already doing the rounds.
So far, Twitter has put in a lot of effort to popularize Periscope. The social media company not only took initiatives to attract more popular people and celebrities to its app but reportedly even tried to make them switch from Meerkat. In the first 10 days after its launch, Periscope was installed by over 1 million people.
Despite all this, Meerkat has proved to be tough competition. Recently, Meerkat developed an app for Android users ahead of Periscope. It was previously limited to iOS users alone.
Now Meerkat will not only have a first-mover advantage in the massive Android market (with 81.5% share of the smartphone market in 2014) but will also have the support of Facebook's strong resources.
Of late, Facebook has been pushing itself to enhance its offerings and create user value. This has resulted in a decent quarterly performance with a robust increase in user base and strong revenue growth despite astronomically increasing expenses.
On the other hand, Twitter's latest quarterly results failed to impress investors. In fact, its shares plummeted sharply following the results. Lesser-than-expected growth in advertisement revenues created problems for Twitter. Given the booming market for live video, Twitter investors are banking on Periscope for enhancing their future returns. However, Meerkat now strengthened by the Facebook alliance, can pose serious threats to Periscope.
At present, Facebook and Twitter both carry a Zacks Rank #3 (Hold). A couple of better-ranked stocks include King Digital Entertainment plc KING and Blucora, Inc. BCOR , both sporting a Zacks Rank #1 (Strong Buy).
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