Is Snapchat the new Facebook ?

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 thjat 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 smartglasses 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 third quarter of 2017,the company reported smaller than expected user growth and a 60% drop in advertising rates.
Revenue was $207.9 million,up 62% year-on-year,but below the $235.5 expected by analysts.
Snapchat added only 4.5 million new users versus the 8 million expected by analysts for the quarter.

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,McDonalds 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.

The Future
Snapchat is still a very young company, and since it’s listing it is experiencing what many young companies face :
Analyst expectations.

Because it is in a high growth sector,expectations are high,which can be cruel on the company.
In order to counter slow growth,the Snapchat app is being redesigned to make it “easier to use”.
There is no doubt that it has faced increasing competition from Instagram,which is owned by Facebook.

It will be interesting to see whether Snapchat can improve performance on it’s own.
Or,will it need to be taken over (like Instagram) in order to be able to have the financial backing to succeed ?
2018 will certainly be an interesting year for Snapchat.

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