Snapchat debuts 12 original shows with AR 'portals'

Brief:

Snapchat yesterday introduced 12 original shows amid its push into exclusive video content. "Snap Originals" will let viewers swipe up on their smartphone screens to open virtual "show portals" and step inside augmented reality (AR) scenes from the shows, the company announced in a blog post.
Snapchat, which helped to popularize AR lenses and filters, created custom interactive lenses for the shows, including "reaction lenses" for key scenes that urge users to share their experiences with friends. Each series has about eight to 12 episodes, and the shows are released daily, according to Variety.
Producers including Bunim/Murray Productions ("Keeping Up with the Kardashians"), the Duplass Brothers ("Wild Wild Country") and Brad Weston (former CEO of New Regency) created short-form TV shows in a vertical format for easy smartphone viewing on the platform. Snapchat users can find shows in Discover, the app's section for professionally produced media.

Insight:

Snap didn't release the names of advertisers whose video inserts appear in "Snap Originals," but anecdotally, Reese's, Target and Sprint were among the brands whose mid-roll ads appeared in shows this week. The spots, which can't be skipped and only last for a few seconds, are marked as an "Ad" on the lower right corner of the screen. Snapchat in May introduced six-second, forced-view ads for shows in its Discover section, according to Ad Age, as advertisers worried their commercials were being skipped.

Snapchat's new original programming may appeal to advertisers seeking to reach younger audiences who spend less time watching TV or are canceling cable subscriptions for digital and mobile alternatives. National broadcast TV ad sales last year fell 2.2%, but showed signs of stabilizing this year as the U.S. economy grew the fastest in four years, per Magna, the ad-buying and media analytics unit of IPG. Magna last month revised its forecast for national TV to show growth of 0.8% to $42.7 billion this year, while also estimating that digital ad sales will rise 16% to about $106 billion.

For Snap, the original programming is another way to keep viewers engaged on its image-messaging platform as the company tries to reverse a declining user base. Snapchat has reportedly seen the most success with shows that update their episodes at least once a day. NBC News' twice-daily program "Stay Tuned" has doubled its audience in the past year and now reaches 5 million unique viewers a day, per Variety. ESPN's "SportsCenter" daily show for Snapchat has an audience of more than 17 million monthly U.S. viewers, pointing to how fresh content on the social app can resonate with mobile users.

The new programming arrives as the company faces continued competition from archrival Instagram. The Facebook-owned image-messaging app this week announced a partnership with Meredith to develop 10 original series for IGTV, the video platform that Instagram debuted last summer.

Snap's estimated ad revenue last month was cut 36% to $662.1 million in a revised forecast from researcher eMarketer, which in March had predicted the owner of Snapchat would reach $1.03 billion in U.S. sales this year. Snap needs to keep an eye on its cash flow, according to an analyst who this week predicted the company will run out of money next year. Michael Nathanson, an analyst with MoffettNathanson, told Reuters that Snap was "woefully short" of profit goals and estimated the company will lose more than $1.5 billion next year.

This comes as several executives have announced their departures, including Vice President of Marketing Steve LaBella and Chief Strategy Officer Imran Khan. A leaked memo from CEO Evan Spiegel said one of the company's goals is to better educate advertisers about using the app, which underwent a controversial redesign earlier this year. Snap is expected to announce its latest quarterly earnings on October 25.