Can Twitter Save TV? (And Can TV Save Twitter?)

On the eve of its fervently-hyped IPO, the micro-messaging service has a radical plan for nabbing the ad dollars it needs to thrive: helping TV networks survive the digital media revolution. This is the cover story of the October 28, 2013 issue of Forbes.

It's Emmys night at the Nokia Theatre in Los Angeles, and as showtime approaches, a mosh pit of blue-chip television stars jostles backstage. Conan O'Brien and Robin Williams, Alyson Hannigan and Jim Parsons, Jon Hamm and Sarah Silverman, all spiffed-up and squeezing past each other and a few score of other celebrities in the narrow corridor between the producers' station and the green room. 'This can't be fire safe,' grumbles Hamm, the Mad Men heartthrob, as he shoulders through the throng.

Maybe not, but a team from Twitter faces a more immediate problem. They spent months negotiating with CBS and Emmy executives for access that resulted in a 'Twitter Mirror' stationed just outside the green room entrance, steps from the stage. A tricked-out looking glass with an iPad embedded in its surface, it lets honorees and presenters coming offstage snap and broadcast casual self-portraits - 'selfies' - to the 246,000 followers of the @cbs and @primetimeemmys accounts.

It's supposed to, anyway. With 15 minutes left before the 5 p.m. Pacific start time, a full house of iPhone-toting actors and producers has overloaded the Wifi network. Andrew Adashek, the boyish 36-year-old ex-producer who manages Twitter's television partnerships, speed-walks through the crowd, trying to find a solution. 'Do you know a guy named Kevin? Curly hair, tattoos?' he asks one stagehand, who doesn't.

Just as it's looking hopeless, one of Adashek's lieutenants scrounges a portable wireless hotspot. Bingo. Moments later, the Deschanel sisters - 'New Girl' star Zooey and 'Bones' star Emily - wander through, fresh from the red carpet. 'Hey, let's take a picture in the Twitter mirror!' Zooey says.

Time check: 4:59 PST.

To its 200 million-plus active users, Twitter is many things: a social network, a short-form messaging service, a news wire, a tool for self-expression - even, some believe, a force for global political change. But the company itself seems far more keen to position itself among its users - and even better, potential users - as a TV companion, an indispensable tool to keep up with, discuss and even influence the outcomes of shows and live events like sporting contests and political debates. This 'second screen experience' turns TV into a participatory activity, allowing Twitter users to broadcast wisecracks, critiques and theories in real-time; the networks, in turn, share the behind-the-scenes worlds of writers' rooms and dressing rooms, 140 characters at a time.

'As we've grown, it's become more and more clear to us that the characteristics that make up Twitter - public, real-time and conversational - make it a perfect complement to television,' says CEO Dick Costolo. 'TV has always been social and conversation-driven. It's just that in the past, the reach of that conversation was limited by the number of people in a room or who you could talk to on the phone or the next day at the watercooler. Broadcasters have come to understand that Twitter is a force multiplier for the media they've created.'

And a force multiplier is exactly what Twitter itself needs. While its recent S-1 filing contains the rapid revenue growth analysts were expecting, it appears to be nearing a wall. The average price of an ad has been plummeting, down 46% in the most recent quarter. To offset that, Twitter needs more eyeballs - but in the U.S., where it makes the vast majority of its money, user acquisition has stalled out, with just a 2% gain in the last quarter. Americans now comprise just one-fourth of Twitter's participants. 'People have a popular awareness of Twitter, but they don't always know how to use it,' says eMarketer analyst Debra Aho Williamson. 'It's a very difficult language to learn for the average user.'

As revenues threaten to plateau, red ink pools. Numerous reports that Twitter was already profitable proved to be off base. Wildly. Net losses, driven by heavy capital expenditures and R&D costs, totaled nearly $70 million in the first half of the year. Facebook, by contrast, was clocking annual profits of $1 billion when it went public in 2012. For money-losing Twitter to sell itself to the public at a $10 billion-plus valuation, as it intends, it needs to sell a new business model. TV is Twitter's panacea.