What is Snapchat+?
Snapchat introduced a new feature called “Snapchat +”.
Jacob Andreou, SVP of Product at Snap, says the subscription is aimed at people who talk mostly to their friends on the app. It costs $3.99 a month. Plus is Snap’s first attempt to make money outside of advertising, although Andreou says he doesn’t expect it to generate significant revenue.
Initial impressions of Snapchat Plus are mostly cosmetic. Plus subscribers will likely still be able to access “single-player-ish” features like the BFF pin, while users that require interaction with others will eventually be able to access them, too. (Yes, that last one reminded me of my old Myspace profile.) With Snap adding a paid tier, it’s natural to wonder if people will be able to turn off advertisements.
According to Andreou, “advertising will remain the core of our business model for a long time to come.” However, Snap is clearly seeking to diversify its revenue stream. Subscriptions are the obvious next step since the hardware business hasn’t and won’t be meaningful for some time. It’s not just Snap: Twitter and Telegram have also launched paid subscriptions, and Discord has made money for years by offering Nitro. Our conversation also includes Andreou’s informal encounters with people who work at paid streaming services – many of which have or are in the process of adding ad-supported tiers. According to him, “They end up making the most money in the tiers where they are able to inject ads,” despite monetizing less.
Despite Snap warning about slowing revenue growth just a month ago, Andreou downplays the timing of the announcement. Despite the fact that his team has been considering a paid offering since at least 2016, I still perceive a sense of urgency from him. Having been discovered in the app’s code just two weeks ago, Snapchat Plus was deemed an “early” internal test. Currently, Snap’s top markets are receiving it: the United States, Canada, the United Kingdom, France, Germany, Australia, New Zealand, Saudi Arabia, and the United Arab Emirates.
The challenge of monetizing Snap’s core chat feature without putting in ads has consistently come up in my conversations with Snap employees. As Snap’s stock trades below its 2017 IPO price, now is the time to figure that out. I see Plus as an indication that Snap knows it needs to find more ways to make money quickly, even though it isn’t expected to significantly move the needle initially.
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