Narrative: Snapchat is Maturing
Each narrative page (like this) has a page describing and evaluating the narrative, followed by all the posts on the site tagged with that narrative. Scroll down beyond the introduction to see the posts.
What’s different about Snapchat’s next new original series – Mashable (Feb 10, 2017)
Yet more ammo for the “Snapchat is TV” crowd, though that feels more and more literal all the time, since Snapchat’s content is more and more actual TV content from actual TV companies, as with A&E in this case. What’s unique here is that the show is both unscripted and not based on an existing show – i.e. it’s original content for Snapchat, though importantly not original content by Snapchat a la Netflix/Amazon/HBO. Snapchat did spend $13.3 million more in 2016 than 2015 on content creation, but in reality that’s about collaborating with existing providers on content rather than creating its own. For now, Snapchat remains a great way for existing TV brands to reconnect with the large portion of its target audience which has abandoned traditional TV.
via Mashable
It’s not just Google — Snap has a $1 billion cloud services deal with Amazon, too – Recode (Feb 9, 2017)
Snap has filed an amended version of its S-1 IPO filing, and it’s added a few extra tidbits here and there. This Recode piece picks up on the most notable: earlier this month, Snap signed a deal with Amazon’s AWS which is worth at least $1 billion over 5 years, for redundant infrastructure (i.e. as a backup to its primary reliance on Google’s Cloud). Unlike the Google commitment, which requires a steady minimum of $400m spent per year, this deal ramps from a minimum of $50m in 2017 to $350m in 2021 (which is probably about how much Snap spent with Google in 2016). That’s a rapid growth rate, and implies that this level of redundancy may be new for Snap, perhaps triggered by investor concerns over its sole reliance on Google. Combined, that’s a minimum $3 billion commitment for just these two infrastructure companies over the next five years, which is about seven times its 2016 revenue – that’s a big commitment and increases the risks associated with slowing growth. Also new in the S-1/A are a couple of paragraphs intended to reassure investors about the multi-class stock structure and the disclosure they will receive with their Class A shares, as well as some expansion on its slowing user growth and the lower engagement levels its Rest of World users exhibit relative to its US and European users.
via Recode (Snap’s S-1/A here)
‘Planet Earth II’ Snapchat Show Will Promote BBC TV Series – Variety (Feb 6, 2017)
More evidence that Snapchat is TV for millennials? (As Ben Thompson, Kerry Flynn at Mashable, and today Christopher Mims at the WSJ this morning have each suggested.) Perhaps more interestingly, though Snapchat has been described as trying to win over TV advertising dollars, this is actually a promotion of sorts for a traditional TV show itself, with shorter-form, vertically-oriented videos on Snapchat as a sort of taster. There will actually be ads within this video as well, so this isn’t advertising per se, though its goal is clearly to drive viewership on BBC America here in the US. As with its Google relationship, Snap’s relationship with TV is likely to be complicated, as it both seeks to steal ad dollars from TV while also taking ad dollars (and content) from the TV industry. At any rate, if you haven’t seen Planet Earth II yet, I highly recommend tuning in when it airs – it’s fantastic.
via Variety
Snap Future Shaped by Complex Ties to Google as Supplier, Rival – Bloomberg (Feb 3, 2017)
This is interesting additional detail around the Snap IPO filing I covered yesterday (and which I wrote about in depth at Beyond Devices today). Snap recently signed a 5-year deal with Google to use its cloud services to the tune of at least $400m per year, and the companies have worked together on some stuff in the past two, including some projects that never made it to production. But Google was also listed among the handful of competitors Snap specifically cited in its S-1, so this relationship is, as Facebook might say, complicated. That’s particularly the case around search, which is one of the areas where Snap was partnering with Google but eventually pulled out and decided to build its own platform instead.
via Bloomberg
Snap Publicly Files for an IPO and Reveals Financial and User Data (Feb 2, 2017)
The long-awaited Snap S-1 was released this afternoon just as Amazon and GoPro were reporting earnings, so it’s been busy. I tweeted some of the most interesting tidbits I saw at first glance earlier, but will do a deep dive for a blog post at some point in the next 24 hours too. Some highlights: the company is growing very rapidly in revenue terms, as it ramps ARPU fast, but still makes 88% of its revenue from North America, even though a majority of users are overseas. User growth has been decent, ending 2016 with 160 million daily active user (its only user base measure), but has slowed in recent months, which Snap blames on both a poor Android update and competitive moves (such as Instagram Stories, though it’s not mentioned by name). It loses money in massive amounts – there’s no clear path to profitability here any time soon, even with rapid growth, as cost of revenues alone outweigh revenues. Engagement is mentioned 103 times in the filing, as was widely anticipated, but the only measure mentioned beyond DAUs is time spent, and it’s not provided on a consistent basis. That’s a worrying sign at a time when Snap needs to be demonstrating that its users are not just using the app daily but spending more time in it. Other tidbits: Apple is mentioned in a list of competitors, and Google is Snap’s cloud provider, with a massive commitment to future spending with the company. This blog post goes into a lot more depth on the filing.
via Snap’s S-1 filing (more coverage on Techmeme)
Warning Signs Abound As Snap Barrels Toward IPO – BuzzFeed (Feb 1, 2017)
Yet more signs that Snapchat is suffering both as a result of Instagram’s recent feature additions and perhaps because of broader cloning of its feature set by local alternatives in Asia. We’ll hear from the horse’s mouth shortly how Snap sees these changes, and it’ll have to work hard to refute these negative signals about engagement and growth in its app when it releases its public IPO filing shortly. The narrative around Snap is quickly turning negative, and it’ll have to intervene quickly to reset it (if it’s able to do so).
via BuzzFeed
Snap Is Working on Smarter Lenses (AR) — The Information (Feb 1, 2017)
AR has seemed an obvious area for Snap to invest in, given its focus on cameras and camera-centric experiences, and its existing Lenses product. So it’s not that surprising to hear that the company is working on AR-style lenses for something other than mere selfies, using the rear-facing camera. It sounds fairly basic for now, and very much in keeping with the idea of superimposing objects onto the real world for taking and sharing pictures. But of course once the technology is there it could theoretically be repurposed for other things too, including a potential future version of Spectacles with AR capability which would overlay virtual content onto the real world seen through its glasses. Lots of potential here, and as ever it’s still very early days in AR (and in the broader AR/VR battle).
via The Information
Instagram Stories is stealing Snapchat’s users – TechCrunch (Jan 30, 2017)
This would be very bad news if it turns out to be true – celebrities and those who manage celebrity and other accounts on Snapchat claim they’re seeing a significant reduction in views of their Stories on Snapchat as a result of both Instagram’s launch of its own Stories feature and Snapchat’s move to kill the Auto-Advance feature for Stories in its own app. This kind of thing is always worth taking with a pinch of salt – the ranges discussed here are very broad, and some of the data might be outliers – but the trend seems to be consistently downward, and is backed up by some app download data as well. The positive spin from Snap here would be that it’s actually focusing engagement more by only showing users the Stories they actually choose to see, but I’m not sure investors will buy that. Again, any day now we should have some real data from Snap to go on to evaluate engagement and usage, but this is another specific concern they’ll need to address in the S-1 filing. In the meantime, more evidence that Facebook and Instagram’s strategy here is paying off, and that when Facebook broadly launches its own Stories feature the impact could be even more severe.
via TechCrunch
Snapchat’s Streaks Drive Usage But Perhaps Not Ad Viewing – Bloomberg (Jan 30, 2017)
I changed the headline here both to capture the main point of the article and to avoid a different connotation with the word “streaker”, which appears in the original. Teenagers in particular, but also some young adult users, work hard to keep “streaks” of activity between themselves and friends on Snapchat alive as long as possible, much as Apple Watch users might try to keep a stand or move streak alive. But the Snapchat behavior verges on obsessive or addictive, and much of the actual sharing between friends ends up becoming meaningless as user post for the sake of posting. Snapchat deliberately encourages this kind of behavior, and it drives usage of the app, but it doesn’t necessarily drive meaningful engagement, which is technically something different. Those users aren’t necessary spending emotionally significant time in the app, and they’re not necessarily looking at the parts of the app where they’re likeliest to see ads. When Snap makes its IPO filing public, digging for signs of this disparity between usage time and real engagement with content and ads is going to be key. It’s really the Discover and other content tabs rather than the one-to-one sharing features that will drive ad viewing and revenue, and Snap needs to be transparent about where users are actually spending time.
via Bloomberg
Digital media fell in love with Snapchat, and now Snapchat loves TV – Mashable (Jan 28, 2017)
This is a great bit of reporting on how Snapchat’s Discover feature has evolved since it first launched, and how Snap’s relationship with publishers and content providers has evolved with it. Discover continues to be the most obvious place for Snap to deliver growth in ad revenue, and having quality content is a big part of achieving that goal. Snap is also putting more emphasis on competing with TV for millennial viewers, an audience which is both overrepresented on Snapchat and underrepresented in traditional TV viewership. There are lots of good comments in this piece from publishers who have worked with Snap and seen good results, some of them driving decent profits from their channels and others merely experimenting with a new format. Well worth reading the whole thing.
via Mashable