Can Snapchat’s Value Outlast its photos?

#snapchat #smartphoneIf you’re under 35, you probably know about Snapchat, where some 158 million mostly youthful smartphone users share self-deleting photos, videos, and text messages. If you’re older, you might know it as that yellow ghost-shaped app you put on your phone a couple of years ago, only to give up because you couldn’t see what it was good for.

Turns out it’s good for almost $24 billion, the value of parent company Snap Inc. after pricing its initial public offering Wednesday, one of the largest for a tech company in years. Cofounders Evan Spiegel and Bobby Murphy will become the nation’s newest digital billionaires.

But the emergence of Snap might end up benefitingFacebook because in 2012 Facebook spent $1 billion to purchase Instagram, a photo-sharing service that’s more popular than Snapchat and a lot better.

Get Talking Points in your inbox:
An afternoon recap of the day’s most important business news, delivered weekdays.

Instagram is backed by Facebook’s massive bankroll and has direct access to 1.2 billion daily Facebook users. Just as important, Instagram features a deep library of photos and videos, strong image search tools, and a new service that’s a shameless but strong imitation of Snapchat.

Which isn’t to say Snapchat is doomed. It has a solid core of loyal users and an assortment of attractive content from major media companies, along with clever ads that had me looking forward to the commercials.

The ads are better than the content created by many Snapchat users. I found mostly trivia — images of people’s breakfasts, videos of their vacations, gripes about high school. There’s got to be better stuff out there. But though I know many people who have Snapchat accounts, most of them rarely log on. Even my twenty-something daughters have steered clear. And because Snapchat relies on word of mouth, it’s hard to find interesting users.

I found help at Ghostcodes, an app that identifies interesting Snapchatters. But the top picks from Ghostcodes included a guy in Honolulu posting videos of the local mall, a woman playing with cats, and another guy flying a drone in his living room.

To inflict similar tedium on your friends, install the app on an Apple or Android phone, and create an account. Then tap the round icon to shoot a photo, or press and hold it to capture up to 10 seconds of video. You can add special effects like attaching dog ears to your head, add a “geofilter” that displays your location, or scrawl text or drawings onto the screen. String multiple still photos and videos together to tell a story, then share it with anyone who cares. You can save a copy of your work, but your online friends can only watch the fun for 24 hours before it self-deletes.

I was on the verge of deleting myself from Snapchat until I checked out its Discover section, stuffed with video presentations from major media outlets. There’s too much Kim Kardashian and fashion tips for my taste. But there is also solid work from CNN, National Geographic, and the Washington Post. And most of it remains available for more than 24 hours. For instance, you might still have time to check out a good package on the joys and woes of air travel, produced by the newsmagazine The Economist. It’s rich, informative stuff, worth an occasional visit to Snapchat even if your friends don’t hang out there.

Then there are the ads — bright video snippets, about five seconds long. My favorite, for the streaming music service Spotify, recommends creating a music playlist for your own funeral. These snappy sales pitches are so brief and well-made I didn’t mind watching.

Last year, Snapchat began selling ads in earnest, and the money is rolling in. Snapchat generated revenues of $404.5 million last year, six times more than the year before. It also lost $514.6 million in 2016, but that came after a growth binge that tripled the company’s payroll. Revenues of $1 billion are expected in 2017, according to Bloomberg. So if Snapchat can bring its costs under control and keep moving those video ads, it might be in a position to turn a profit in a few years.

But the Snapchat offering contains the familiar warning from a young and growing tech company, that it “may never achieve or maintain profitability.” The Instagram rivalry gets much of the blame.

Instagram has 400 million daily users, more than double Snapchat’s audience. It has billions of permanently stored photos and videos, including stuff posted by your Facebook friends. Unlike Snapchat, the search features on Instagram make it easy to find images you like — waterfalls, airplanes, and, of course, kittens. And it now offers a Snapchat clone, called Stories.

It took Snapchat five years to hit 158 million users; Instagram Stories reached 150 million in four months. The publicity surrounding Snapchat’s stock offering will only bolster Instagram’s momentum. Millions of curious newbies will install them both. Some will lose interest quicker than a self-deleting video. But of those who stick around, most will stick with Instagram just because it’s better.

Source : bostonglobe

  • 5.0
5.0Overall Score

Post Comment