Snapchat And The Future Of Snap Inc. – $SNAP

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Snapchat And The Future Of Snap Inc.

The Snapchat app being confusing to the older generation was addressed with a redesign just ahead of filing for its IPO. Additionally, the app has grown beyond its original use case, which focused on communication, and now includes short, easily digestible content from a number of sources, including media and entertainment properties. It seems these shifts may be paying off. According to a new report out today from eMarketer, much of Snapchat’s growth is now being driven by older Americans. The analyst firm says in 2017, 6.4% of Snapchat’s users will be between the ages of 45 and 54, which is up from the 4.2% previously projected. That is still a small piece of the pie for an app whose main demographic is young adults and teens. However, eMarketer says that all projections for users older than 45 have increased, while projections for users younger than 24 have slightly decreased.

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The latest is associated with the increasing competition from Facebook-owned Instagram, the firm’s report says. Since the launch of Instagram’s own Snapchat – like Stories feature, growth decreased by 82%. That slowdown might not be all Instagram’s doing. International competition from apps like Snow, as well as technical errors in the rollout of new products, could have also created problems. But eMarketer is now predicting the gap between Snapchat and Instagram will broaden. The former closed out 2016, just 6.8 million users behind Instagram. By 2021, eMarketer thinks Instagram will have grown to have 9.5 million more users than Snapchat. This year, Snapchat will capture 36.8% of the U.S. social network user base compared with Instagram’s 40.3%.

Meanwhile, Snapchat’s growth among older Americans has much to do with Snapchat’s content deals, which have more recently included those with the NFL, NBCUniversal, Turner, Hearst, and Disney along with others. For example, Snapchat recently announced expansions in original programming with shows from A+E Networks and BBC’s Planet Earth II. Jaimie Chung, eMarketer’s forecasting analyst stated, “The usage trends are largely the result of a shift in the primary use case of Snapchat. Older groups are now more likely to tune in for content. The platform has multiple partnerships with television networks for mini-episodes. Meanwhile, the younger groups are less likely to add Snapchat when Instagram Stories can fulfill their broadcasting needs.”

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