Snap went public nine months ago and ever since investors have been unimpressed with its results. Most recently (Q3 2017) it posted a net loss of $443.2 million, up from a $124.2 million loss the year earlier, and, perhaps more importantly, user growth is lagging.
Along with its results, Snap announced it will completely revamp its Android app, building it from the ground up. What this will look like is anyone’s guess, but George Jijiashvili of CCS Insight told Mobile World Live: “It’s likely that the app revamp will streamline much of its functions and make it more appealing to newcomers.”
That it wants to revive user growth is obvious. CEO Evan Spiegel stated Snap is targeting three groups: Android device owners; those outside of markets such as the US and UK where the app is doing well (and where its user base is probably saturated); and those above 34.
The last one is a big ask considering the app has a perception that it’s very much a product for millennials. As a reporter on The Next Web noted: “I’ve heard the phrase, ‘I’m too old for Snapchat’ more times than I can count.”
Jijiashvili said Snapchat’s user interface is “infamously confusing to those who are new to the app” and “was one of the main reasons some users (including myself) gave up on it”.
He added that the biggest issue facing Snap is “differentiation, which will be the hardest problem to find a solution to.”
It’s no secret Instagram and WhatsApp, both owned by Facebook, cloned Snapchat’s popular feature, Snap Stories, a presentation of pictures and videos made by the user that disappears after 24 hours.
Instagram Stories and WhatsApp Status have each reached 300 million Daily Active Users (DAU) – not great news for Snapchat, which has a total of 178 million DAU.
The success of the clones is probably because Instagram and WhatsApp had more users to begin with, who then found it easier to use the feature within a familiar app. Instagram also likely has a more varied user base in terms of demographic.
Instagram has 500 million DAU (meaning more than half are using the Stories feature) and WhatsApp has a billion.
Snap is more than aware of the risks of alienating its current user base in its efforts to expand. In Spiegel’s own words: “There is a strong likelihood that the redesign of our application will be disruptive to our business in the short term, and we don’t yet know how the behaviour of our community will change when they begin to use our updated application.”
But, he said, “we’re willing to take that risk for what we believe are substantial long-term benefits to our business”.
Noting this, Jijiashvili warned: “Snapchat has tough times ahead and I think that in order to meaningfully grow its user base, Snapchat will have to come up with something substantially more innovative than a dancing hot dog.”
Focus on augmented reality
The hot dog is a popular feature that’s part of Snapchat’s AR filters. Snapchat upgraded its Lenses back in April so that users could add 3D objects to their images and videos. But like other things on the internet that go viral, the hype around the hot dog quickly died down.
Last month, Snap launched a feature enabling people to view sculptures designed by American artist Jeff Koons. Will this focus on AR give it the edge it needs?
According to Paul Barnes, territory director, northern Europe and Middle East at App Annie: “What’s key to AR integration is how it affects the overall user experience that people are used to – if it’s clunky and disrupts from ease-of-use people will quickly get bored.”
In his opinion, Snapchat’s adoption of AR is creative and leans on the success of its filters, “enabling users to go that step further with their snaps”.
“Interestingly, they’ve partnered with an artist who, it could be argued, lacks an international reputation with millennials. With app features, publishers don’t get much time to make an impression; it’s often easier to hook onto an existing trend with new technology than reinvent the wheel. However, if there’s an app that can successfully integrate AR with a user group of early adopters, we’re confident Snapchat will find the sweet spot,” he said.
There is another thing going in favour of Snap – the interest of a certain Chinese tech giant.
Tencent Holdings said it could help Snap publish video games and improve ad sales after acquiring a 12 per cent stake in the company.
“The investment enables Tencent to explore cooperation opportunities with the company on mobile games publishing and newsfeed as well as to share its financial returns from the growth of its businesses and monetisation in the future,” it said in a statement. It also mentioned the potential for newsfeed ads.
Games and a newsfeed are not a part of Snapchat, but perhaps it is something they are exploring with the revamp.
Not everyone is optimistic though. The same report on The Next Web noted that “the overhaul might come a bit too late. The reputation of being hard to use is difficult to shake, and Snapchat’s had that as a cornerstone of its appeal for so long, the redesign would have to be both massive and smoothly integrated for it to do any good.”
However, a combination of setting itself apart with AR and a redesigned app that can satisfy its current users as well as attract more, potentially older, ones, might be just what the company needs to boost its app.
The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.