Alexandra Karaoutsadis

8 November 2017

Snapchat To Start Paying Creators Amid Stock Price Plummet

Following in the steps of platforms like YouTube, Snapchat has decided to start paying top creators who use the platform. This is due to start with ad revenue on a creator’s specific Snapchat handle, with plans to expand out over the years to include more distribution and monetisation options.

The news comes as part of Snapchat’s quarterly Prepared Remarks Report, which also detailed a 15% loss in share price in afterhours trading. It is also accompanied by the platform’s drop of monthly user growth from 17.2% to just 5%.

To break that down, the company brought in a total revenue of $207 million for the third quarter, but lost $443 million. It has been described that at least $40 million of the losses was due to the sub-par release of Snapchat Spectacles.

Spectacles Cost Snapchat $40M

The Spectacles, which are characterised by their built-in camera capabilities, did not perform as the company thought they would. Put simply, customers didn’t buy as many units as Snapchat anticipated, which led to an excess of inventory and ‘commitment cancellation charges’.

With 178 million daily users globally, the company only managed to sell 150,000 units of the glasses. Although the number is low, it is a higher digit than the number of iPods sold in the first year, which could be an indication that Snapchat’s future in hardware sales could potentially grow.

The report also commented that Snapchat is one of the most used cameras worldwide, with 3.5 billion snaps created daily. This figure is higher than the average number of photographs taken across phones, digital cameras and tablets daily (excluding Snapchat). This may indicate the products likely to become available in the future.

Steady Fall Compared to Competitors

As touched on earlier, Snapchat plans to start paying creators initially through an ad revenue system. However, its competitors (namely Instagram) have already allowed creators to gain revenue within the platform through both advertised posts and sponsored posts.

In fact, Instagram seems to be killing it with 250 million daily users on their Stories feature, compared to Snapchat’s 166 million. What does this mean for Snapchat? Well, right now it could explain the company’s stock price dropping in this quarter. The ability for users to engage with their audience is seemingly easier done in Instagram than the Snapchat platform.

Snapchat Overhaul in Progress

In a bid to boost future engagement and increase the usability of the platform, Snapchat is in the process of working on a significant redesign of its app. Snapchat CEO Evan Spiegel addressed the issue that has been a common concern amongst users, stating that over the years, they have come to realise: “Snapchat is difficult to understand or hard to use, and our team has been working on responding to this feedback. As a result, we are currently redesigning our application to make it easier to use.”

In the coming year, Snapchat’s main focus is centred around user growth, content, and implementing more features that work with augmented reality. With the future of the app – and in turn, the app development company – set for major changes in 2018, it will be interesting to see how the platform performs in an everchanging and highly competitive industry.

Share on:

Let’s Add Value
To Your Business.

Have a business problem you need solved? Get in touch.