Snap Inc. has been trying hard to justify its IPO filing. Now, the company wants to reach its predominantly young audience using television – a medium many of them are actually avoiding. Though not exactly new, Snap presented “Shows” – a featured tile beneath the Discover and Stories section – in a video last week. Naturally, Shows will feature ads.
Slow user growth and weak advertising revenue growth rates have prompted the move as Snap tries to halt a slowdown to the Snapchat app business.
By adding ads between Shows, it hopes to generate a higher revenue.
The company will debut its Show with BBC’s Planet Earth II sponsored by Goldman Sachs.
In addition, Snap announced partnering with Discovery Channel to turn MythBusters and Shark Week into Shows.
These aren’t the first experiments with its Shows section. Snapchat has already run Shows including The Bachelor, The Voice, Saturday Night Live and Game Day.
Whilst many video platforms are jumping on the mobile bandwagon, trying to produce suitable content, most of this content is essentially branding. Snap however wants to be first in line to adapt traditionally TV content for the small screen.
And whilst it won’t be “first” – after all most major channels have their own apps and let’s not forget Netflix – Snapchat didn’t even have to ask networks to join in. Following its success with publishers across Discover, Snap was approached by networks wishing to tap into that same audience reach.
With the mobile advertising market on track to generate $196 billion over the next four years, TV advertising is likely to see further decline. In fact, research by Morgan Stanley found that the TV business is already turning to subscriptions for revenue.
Source Morgan Stanley
A report by DoubleClick by Google found:
Just a few years ago, conventional wisdom was that no one would watch TV on a smartphone. The screen seemed too small. But the convenience of essentially having a TV in your pocket trumped form factor. So much so that we are now seeing 50% of all YouTube views coming from mobile devices, and from the Adobe’s Digital Index we are seeing that 58% of authenticated TV Everywhere streams in Q1 2014 coming from iOS and Android devices.
It remains to be seen if Snap Inc. can succeed with Shows, but it certainly has potential.