Apr 27, 2016 · 6 minutes

The future will not be televised, but it will be video – and above all, it will be live.

You may disagree. You may still think of live – what most of us still call the present moment – as a precious chance to enjoy, say, the archaic pleasure of taking a casual walk on a fine day. Or having a conversation with a human being who is just there, a few feet in front of you, rather than having a pair of smartphones as your data-sniffing intermediaries. Or even the bizarre practice of foregoing yet another livecast to just take a seat at a corner cafe and watch the world go by.

And if that's what you want, well, good for you. But the digital-media giants have different plans for your future. Facebook, Google, Yahoo and now Twitter keep telling us the future will be much different. It is happening on your phone! It is video! It is LIVE VIDEO! And all this business about taking walks, or conversing in person, or sitting at corner cafes, well, you'll just have to learn to live without all that.

There is something a little fishy, if not a little desperate, about this vision. And yet it keeps surfacing whenever digital-media companies talk about their future earnings. The pitch keeps falling flat. Google's stock tumbled after its first-quarter earnings, despite crediting video for its growth. So did Apple, a company that has yet to beat the live-video drum but has apparent ambitions in video. Facebook, which is repositioning its engineering and rhetoric around live videos and the ads that can be sold on them, reports later today.

And then there's Twitter. The company bought Periscope a year ago in response to a faddish surge of interest in Meerkat, another app that captures and shares live videos. But more and more, the company sees live video as a key to its future. Not just Periscope and Vine, but the conversations that Twitter can host alongside live events like a football game or a political debate.

Twitter loves live video: During its conference call, executives used “video” 58 times and “live” 46 times. By contrast, “timeline” was used nine times. And this in a quarter after Jack Dorsey vowed to tweak the timeline to make it easier for novices to set up and enjoy. Had the tweaks brought in more new users than it annoyed older users, we would have heard about that. As it is, Dorsey only said he'd keep tweaking the timeline, and then kept quiet for most of the call.

Word counts don't value Twitter, though. What values Twitter is the daily public election that is the stock market. Twitter's stock tumbled as much as 15 percent in afterhours trading, even though the company said revenue rose 36 percent to $595 million. This was bad news for two reasons. First, analysts had expected $608 million. Second, revenue was growing at an annual rate of 74 percent a year ago, and a rate of 119 percent two years ago. Twitter is growing, but at a much slower rate. Facebook, by comparison, is seeing its revenue grow by 44 percent.

That's not the only reason the stock tumbled. Twitter also forecast revenue in the current quarter to come in between $590 million and $610 million, well below the $677 million that analysts had forecast. Are analysts to blame for getting their forecasts wrong? Maybe, but that doesn't change the sobering fact that Twitter's annual growth rate will slow further this quarter to somewhere between 17 percent and 21 percent.

Twitter has long disappointed when it comes to user growth. Yet few observers were obsessing over MAU statistics yesterday, even though they inched up to 310 million from 302 million a year ago. Instead, the focus shifted to what had always been the silver lining in Twitter's earnings reports – its ability to monetize active users by selling ads effectively to them.

Last quarter, ad spend hit a rough patch, one that may extend into the current quarter. And the reason? Why, it's our friend live video. As Twitter said in its shareholder letter,

Brand marketers did not increase spend as quickly as expected in the first quarter... Spending on video... largely replaced other legacy Promoted Tweet spend, as marketers traded up into higher performing video units from traditional Promoted Tweets.

This bears some unpacking of rhetoric. The basic message from Twitter this week is that video is growing, but it just happens to be cannibalizing older ad models like promoted tweets. These were crucial for Twitter's growth because they offered a unique way for companies to build brands. But Twitter sees the future in video, so cannibalizing this cash cow is okay, right?

Maybe not. Branded advertising was always Twitter's wheelhouse. It's what it did well, even against Facebook and its targeted ads based on granular user data. But it's far from clear that Twitter can do video ads as well as it did branded advertising. Again, that's an area that Facebook and others are pushing into aggressively. And in the meantime, branded advertisers are scaling back spending on Twitter – ostensibly because of video ads, but who really knows?

This is the key issue with Twitter right now – that is, this is what changed this week. The old debate over Twitter's active users has given way to a bigger question of how necessary advertisers see it. To be clear, there is no evidence that advertisers are backing away from Twitter, but there are warning signs leading to speculation. If that bearish speculation bears out, things have just gone from bad to worse for the company.

On the earnings call, analysts tried to tease out more information on this question, but the company stuck to its narrative about a shift to video ads. Wells Fargo analyst Peter Stabler asked,

Could you help me reconcile a couple of things here? So we are hearing pretty strong commentary regarding return on investment, new advertising, products measurement, etc. Yet sequential guide is a bit perplexing to us. Even mature media companies growing 3 percent to 5 percent a year can put up sequential gain in the second quarter. So, I guess, is there a suggestion here that current advertisers are pulling back spending?

This is how an analyst throws shade – subtly, indirectly. Stabler was asking a question on many minds: How could revenue growth be so bad last quarter, and why is it staying so bad? Twitter chief operating officer Adam Bain replied,

More of these advertisers will trade up from these legacy brand promoted tweets into promoted video products. Again, we think this is a great thing for the platform since video consumes less inventory. It’s a great thing for those marketers. They see great return on investment when they use video versus traditional promoted tweet products. And it’s also better for consumers. Consumers report enjoying the video ad experience even to a greater degree than what we see in traditional promoted tweets.

And this is how a company spins good news out of bad. Any time a media company says people love its ads, video or not, watch out. All you consumers who feel Twitter's video ads have improved your enjoyment of life, please speak up.

The story Twitter has been telling of its turnaround continues to fray apart. The future of Twitter lies in video. And the thing that sent its stock diving is video. Got that? It's true that tech companies routinely navigate such volatile transitions from a dying market to a thriving one. But after a year or so on the defensive, one has to wonder how Twitter can manage this awkward shift.