Snapchat Content Business faces “intense” competition: CEO Spiegel
Snapchat’s entertainment business, including its abridged original series, is where the company faces the biggest battle for consumer attention, CEO Evan Spiegel said.
Spiegel, who spoke at the Goldman Sachs Communacopia conference on Wednesday, was asked to identify Snap’s competitors. He responded that at a high level, Snapchat’s entertainment business competes with “anything in the entertainment business,” including games. “The competition there is going to remain quite intense,” he said.
With Snapchat’s video business, “we had to convince people for years to cut video vertically,” Spiegel said, adding that this has become much less of a problem today.
Other aspects of Snap’s business are less about buying time against other apps and more about improving Snapchat’s usefulness, like connecting with friends or finding new products. When it comes to international expansion, the company is working to make Snapchat culturally relevant and localized in individual countries, including Europe and Japan, Spiegel said.
Snap just posted a record quarterly second-quarter revenue, with sales more than doubling to $ 982 million. During the period, Snapchat recorded 13 million daily users, the best user growth rate in four years, averaging 293 million DAUs worldwide. For the third quarter of 2021, Snap expects to reach 301 million DAU globally, which would represent a 21% increase year-over-year.
Spiegel said that Snapchat Spotlight, the user-provided video section that the app launched almost a year ago, represents “the first time a video can go viral on Snapchat.” At one point, he and other executives at the company were “terrified” of damaging content quickly reaching large audiences. Snap mitigated that risk by heavily moderating the Spotlight section, using both AI and human reviewers, he said.
Originally, Snapchat said it paid over $ 1 million a day to the creators of Spotlight, based on engagement with their content. Starting in June, the company obviously reduced the overall amount it pays, which would have led some users to abandon Spotlight.
According to Spiegel, one of the problems with Spotlight was that there was a lot of copied content: users would see winning content and “just do the same.” Even after changing the terms of the program in an attempt to attract a greater diversity of video content, Snap had a record number of submissions to Spotlight, he added. The company is now focused on developing “content understanding” technology to determine at scale what makes a video compelling and to be able to recommend it to Snapchat users, Spiegel said.
Spiegel said Snap was also optimistic about using AR lenses in the Snapchat app to make shopping easier, for example, by allowing users to visualize themselves wearing different clothes.
“We felt there was a huge opportunity to improve the shopping experience, to make it something a lot more immersive and fun,” he said. About 30% of Snapchat users’ discretionary income is spent on fashion accessories, according to Spiegel.
The COVID lockdowns have been “difficult” for Snap from an engagement standpoint, Spiegel acknowledged. “The good thing is that the bottlenecks are reduced… we are definitely seeing improvements in the metrics that are important to us, including the posting of stories and the use of the map,” said the CEO.
The Snapchat app turns 10 this week, Spiegel noted. “When we started our business, people only used their cameras to record important moments,” he said. “We identified this opportunity to use the camera to communicate.”