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Nowadays technology is moving so fast that it is essential for the leading players to keep up to date otherwise they will be overtaken by one of the emerging companies. One of the newer companies is Snapchat and people are asking the question:
“Is Snapchat the new Facebook?”
Snapchat was started in 2011 by Evan Spiegel, Bobby Murphy and Reggie Brown at Stanford University. The original idea was to create an application which would allow users to share images that were short-lived and self-deleting. Because the photos are short-lived these would normally be fun photos. As is often the case with new technology the uses very often broaden from the original idea. Snapchat evolved into a mix of private messaging and public content including live events such as sports and music.
The company grew quickly and in November 2012 users had shared over one billion photos with 20 million photos being shared every day. New facilities continued to be added such as the ability to send video snaps in addition to photos in December 2012.
According to Snapchat’s own statistics, in May 2015 users were sending 2 billion videos per day which grew to 6 billion by November. By 2016, the daily video views had grown to 10 billion. In May 2016,the company raised $1.81 billion in equity, demonstrating the strong financial interest in the company.
In September 2016, Snapchat Inc. was re-branded as Snap Inc, and the company released Spectacles, which is a pair of smart glasses with a built-in camera that can record 10 seconds of video at a time. These glasses are being sold in pop-up stores throughout the country.
Recent performance
In the final quarter of 2016,Snapchat announced that it has 158 million daily active users. Sales are generated mainly through advertising and increased from $58.7 million in 2015 to $404.5 million in 2016. However losses increased from $306.6 million in 2015 to $514.6 million in 2016. On average, Snapchat makes $1.05 from each user per quarter,which compares with $4.83 that Facebook makes. However, Facebook is well established and Snapchat is less than 6 years old. The revenues tend to be seasonal,with the most advertising dollars spent in the last quarter of the year.
Demographics
In 2014, researchers from the University of Washington and Seattle Pacific designed a user survey group to try and understand why the application was being used.The findings were that users do not utilize Snapchat for sensitive content. Rather it was used for applications such as “stupid faces” with 59.8% of respondents reporting this use was the main reason for using Snapchat. As a result,the study suggests that the success is not due to its security properties, but because users found the application fun to use.
Monetization
Snapchat’s first paid advertisement was show to users in October 2014, which was a movie trailer for the horror film Ouija. Like all companies, it recognizes the need for a revenue stream. In 2015,McDonald’s paid for a branded geofilter covering its restaurant locations in the United States. Initiatives continued to earn revenue, one of which involved the National Football League to present live stories from selected games. In 2016 the company announced a deal with NBC Olympics to allow stories from the 2016 Summer Olympics to be featured on Snapchat in the USA. The stories covered a combination of footage from NBC,athletes and attendees.In addition,NBC sold advertising.
New York Listing
Snap Inc. the parent company has revealed plans to go public in what is expected to be the largest US technology listing in recent years. This has surprised many people as the losses have increased every year.Despite this, it is expected that the company will be valued at between $20 billion and $25 billion.
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