Can Research In Motion Ltd (BBRY) Become the Next Twitter?

This revenue stream has been under pressure from carriers, who don’t want to pay these fees and would prefer subscribers to use their own network infrastructure. BlackBerry 10 devices support generic smartphone data plans from the carriers. Investors expressed concern over BlackBery’s ability to monetize BBM, selling off shares by 4% the day the cross-platform move was announced.

However, the company did outline another way to potentially monetize the service indirectly through advertising. Research In Motion Ltd (NASDAQ:BBRY) is making BBM a broader social networking platform, with BBM Channels where companies can connect with BBM users, who can follow brands that they like. Like any ad platform, business will pay for sponsored ads and other paid forms of interaction. Simply put: BlackBerry wants to turn BBM Channels into a social feed full of ads analogous to Twitter or Facebook Inc (NASDAQ:FB).

The challenge there is that advertising dollars follow the users, and Facebook Inc (NASDAQ:FB) and Twitter already have all the users and network effects. BlackBerry now has 72 million paying subscribers. The company will need to meaningfully add free iOS and Android users if it hopes to score ad dollars, a tough proposition considering how many messaging alternatives there are. In contrast, Facebook Inc (NASDAQ:FB) is now up to 1.1 billion worldwide users. If you were a business, where would you advertise?

How does BBM alone make Research In Motion Ltd (NASDAQ:BBRY) a strong buy? It doesn’t.

The article Can BlackBerry Become the Next Twitter? originally appeared on Fool.com and is written by Evan Niu, CFA.

Fool contributor Evan Niu, CFA, owns shares of Apple. The Motley Fool recommends and owns shares of Apple, Facebook, Google, and Microsoft.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.