Time Warner signs $100M deal for Snapchat shows, ads

Dive Brief:

Time Warner Inc.'s Turner cable channels and the Warner Bros. studio will create as many as 10 original shows a year for Snapchat in a $100 million content and advertising deal, according to a press release by Time Warner. The two-year agreement is one of the biggest show development deals for parent company Snap, which is attempting to reinvent TV for a younger audience of mobile users.
The deal includes Time Warner’s development of scripted drama and comedy series and an advertising commitment from HBO, Warner Bros. and Turner Networks. Snap will keep 50% of the ad revenue from shows, while its media partners will keep the other half, The Wall Street Journal reported. Shortly after the announcement of the partnership, Snap's stocks jumped nearly 3%.
Meanwhile, Snapchat is said to be reconsidering its stance against brand placements and partnerships in its fledgling original programming, said unnamed people cited by Advertising Age. Advertising tie-ins might be allowed in new shows that Snapchat has been developing with media partners like A&E Networks, Hearst, Turner, NBC Universal and others, the magazine reported.

Dive Insight:

Time Warner’s commitment to developing shows for Snapchat is another sign that traditional media companies are increasingly acknowledging the power of mobile media to lure an audience, particularly among younger people who are cutting the cord for alternatives like Netflix, Hulu and other entertainment streaming services. The agreement with Time Warner follows Snapchat’s development of shows with CBS and Comcast’s NBCUniversal, which also invested $500 million in the initial public offering of parent company Snap in March.

Like other original shows on Snapchat, Time Warner's programming will be shot and produced specifically for the platform’s vertical format, and they'll run 3-5 minutes in length for more convenient mobile viewing. According to the press release, they're set to feature motion graphics, split screens, sound and quick cuts to match the mobile communication habits of Snapchat users.

Snap is under pressure to prove it can monetize its audience of 166 million monthly active users as its stock falls back to the IPO price of $17 a share and erases gains for investors. Media executives told The Wall Street Journal that Snapchat’s audience metrics are promising. Snap said that the audience for NBC’s “The Voice” rose 45% from a year earlier in its second season on Snapchat. The mobile app seeks to increase the number of shows by the end of the year to three a day from one currently, according to a statement.

According to Nielsen data, the biggest drop in TV viewing last year was among teenagers, a key audience for Snapchat. They watched 13 hours and 54 minutes of traditional TV a week in Q4 2016, an 11% decline from the year before and a 38% drop from five years ago, according to data by Nielsen. Still, Snapchat faces some impediments to video adoption. In April 2017, a JPMorgan Chase survey found that two-thirds of surveyed Snapchat users never watch video ads on the platform, while 73% said they never interact with Snap Ads by swiping up to access more content.