Elon Musks 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 Musks X, the longtime home to brief text-based musings, and more recently, a cratering ad business thanks to its owners many missteps, declared that it had become a video-first platform. What the service, formerly known as Twitter, means by that statement wasnt 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.

Its 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. Its the same reason why countless media companiesYahoo and a number of news outlets circa 2015, for examplebet 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 outand 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. Theyre 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 its 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 Amazons Twitch. But again, he would be making a late entry into the free streaming niche, whose underlying value propositionfreedoesnt 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 doesnt 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 its 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

Want to send thoughts or suggestions to Data Sheet? Drop a line here.

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.

The nice thing about what Adobe did is we said, Were 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 dont 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. Adobes Firefly trained only on Adobe Stock content.

Salesforce and Slack pause all hiring in technology and product divisions, according to leaked memo, by Kylie Robison

The European bureaucrat who sends a chill through Big Tech just said shes looking closely at Microsofts relationship with OpenAI , by Paolo Confino

Bryan Johnsons anti-aging Blueprint basics are now officially available to the public for $333 a monthbut youll need the right vibe to join the fun, by Orianna Rosa Royle

Apples VP of finance is the new CFO at Sonos. Heres 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 worlds largest car exporterwhile 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 2020and the highest since the GFCafter a stunning 72% surge, S&P Global finds , by Will Daniel

Microsofts 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 companys 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 Microsofts 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.

This is the web version of Data Sheet, a daily newsletter on the business of tech. Sign up to get it delivered free to your inbox.

2023 Fortune Media IP Limited. All Rights Reserved. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice| Do Not Sell/Share My Personal Information| Ad Choices
FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. FORTUNE may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.
S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Terms & Conditions. Powered and implemented by Interactive Data Managed Solutions.