How Much User Growth is Left for Twitter?

Though Twitter is on pace for 350M users by 2016, this figure is likely to disappoint management and shareholders alike. Yet the cause could be more dire: Twitter is struggling to scale its 'network effect'. Why?

Last week, I wrote about the significance of Twitter exiting the high user-growth stage of its life before solidifying a profitable business model. Until this occurs, the company’s valuation will likely remain tied to the size of its user base, or “Monthly Active Users” (MAU). Given this and the company’s superlative opening day, I thought I’d take a quick look at how much headroom is left.

Twitter’s user base was once expected to compete at or at least near the scale of Facebook. Today, however, reaching even half of the world’s largest social network’s current (and still growing) 1.2 billion MAUs seems unlikely. At the end of 2012, for example, Twitter CEO Dick Costolo reportedly set a 2013 year-end target of 400M users – more than double 2012’s finishing 193M MAUs. With only 232M MAUs as of September 31st, it now looks as though Twitter may not hit even 25% of Costolo’s goal (250M).

BGR speculates that US MAUs (70% of Twitter’s global user base) could begin “trending down… as soon as this coming winter”. Though this would represent a dramatic (and essentially baseless) inversion of current subscriber trends, it’s quite possible that ‘peak Twitter’ is not that far off.


Using the above trendlines, we can estimate that Twitter will have roughly 350M MAUs by the end of 2016 (and Facebook 1.5B). On the surface, 50% growth in a metric as important as MAUs should be encouraging for both management and shareholders. Yet, in the quick boom-and-bust social media space, a 14% compound annual growth rate may disappoint – to say nothing of the fact that Twitter would still be short of Costolo’s 2013 goal more than three years later. However, I’ve doubts that Twitter will deliver against this forecast, let alone surpass it.

As an occasional Twitter user, I’ve always wondered at what point the service might become oversaturated, or too “noisy” for the average user. Beyond establishing a profitable business model, management has outlined two overarching priorities: increasing penetration (MAUs) and enhancing per-user engagement. While success on these two fronts would represent an exponential increase in the volume of content created by and available to its users (both great things), it could also threaten the service’s usability.

Unlike other social networks, Twitter’s value is overwhelmingly focused on real-time communications. As a result, it shows its users an uncurated list of every followed user’s tweets in reverse chronological order. Conversely, Facebook, LinkedIn and Google+ each expose their users to only select, algorithm-determined updates from their network. This “everything” approach has historically made it difficult for those who don’t check Twitter multiple times per day to remain engaged in the service.

Increases in the number of Twitterers a user follows and/or the number of tweets put out by each followed user will exacerbate this issue – and could thus limit Twitter to a maximum “saturation point”. But is there data to support this?


The graph above does look like a positive story. Despite immense growth and expansion from “early adopters” to more mainstream users, Twitter has managed to stabilize its conversion rate of account registrations into MAUs. Yet, this same stabilization suggests the service is not scaling well. As a social network, the network effect should mean that the service’s value to its user base will increase with each additional user. A 2.3x increase in user registration since Q3 2011 should therefore have driven a meaningful increase in the registration-to-MAU conversion rate. Furthermore, Twitter has benefited from increased cultural significance and integration over the past few years, as well as expanded its functionality and released new features. As result, the 27% figure estimated by Twoplist is cause for concern.

Twitter’s slowed user growth, impending saturation and plateaued MAU conversion rate should concern those relying MAU growth to enhance shareholder value or provide Twitter with “monetizable scale” . It also suggests that significant product changes are needed to recatalyze growth (my colleague Will Meneray goes into this issue and its risks here). Without them, Costolo’s goal may never be realized.