Snapchat is showing signs of a company that's trying to grow, but isn't sure how to do it. It has millions of users, and yet it doesn't know how to make any real money from them.
In 2015, the app will make $50 million in revenue (it's been making zero until this year) but those figures aren't exactly adding up to the valuations for the entire company.
It has been over two years since Facebook offered $3 billion for the company, and everyone laughed. The Snapchat team were convinced there was more money to be made and they laughed back when a valuation of over $16 billion came in earlier this year.
Flailing its arms in the air, the company has now decided to charge users for one of the apps most limited features.
Replays on the Android platform now cost real world money, if you want more than the normal one per day. It's only on Android devices in the US but it's sure to roll out to the rest of the world at a later date.
Right now, you can buy three extra replays for $0.99, 10 for $2.99 or 20 for $4.99. It's not cheap to rewatch those pictures of genitals, and the problem is that people will likely pay it. This is functionality that shouldn't cost money, and kind of undermines the app entirely.
It's not a big surprise with millions of, mostly very young, fans around the world using the photo-disappearing app on a daily basis. But Evan Spiegel and Bobby Murphy have been struggling to make money from the platform, and it's only doing so this year after the introduction of small ads within the Discover feature.
Whilst Instagram, Facebook and even Tinder have managed to include advertising into their platforms, Snapchat still hasn't found a suitable way to do it for normal users.
As for replays, it undermines the entire idea of Snapchat. The point is to have something you only see the once - if someone can buy up those replays, are you likely to send the same kind of content anymore?
Also, with an audience made of mostly under 16 year-olds this is going to make a lot of money from parents' credit cards.
It's a remarkably similar situation to the in-app purchases within some of the most popular games on mobile. Look at Angry Birds 2, That game that charges you for 80 crystals which only gets you one replay of a level and a little bit more. You need to spend a bit more to get two.
I complained about this exact same thing when Angry Birds 2 launched and it shouldn't just be met with the "well, everybody does it" response. Just because the rest of the crowd does it, Snapchat shouldn't follow.
There are better ways of doing it; Hearthstone and Fallout Shelter show up Candy Crush whilst Tinder is now in the situation where it shows up Snapchat.
The dating/hook-up app now advertises the game Fallout Shelter as a potential match. It's something you can swipe away quickly if you're not interested or you can just keep watching an interesting way of advertising.
New camera modes and the editorial section show Snapchat is more than just sending funny pictures. It's about sharing quick, disposable snapshots, and seeing events from different perspectives in an easy-to-consume method for the generation who want everything in the here and now.
I don't want Snapchat to screw this up, but moves like this show it's inevitable. There must be a better way around this than micro payments . Even sticking in a quick advert for a film inside my Snapchat window would be better than charging ridiculous money for a feature that should come free.
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