Because people would actually use it. A feature which no one uses is worthless.
I'm not saying I agree with the strategy, but you can't really say it failed. For a $30M acquisition it was quite a value as it exploded in subsequent years, it would have easily been approaching a $1B valuation at its peak, it only petered out in the last couple years. I really can't see how building a looping video feature into Twitter would have achieved that kind of reach (of course it would also have been hard to measure)
How is "having the potential to create a community around it" (and failing) more valuable than catering to the actually existing Twitter community?