Is Snapchat the next Twitter?

Categories: Business, Gear, Technology

Twitter is dying at a rapid rate. Although the soundboard for millions globally and the preferred megaphone for the leader of the free world, the app remains unprofitable. In April, the company reported an 8% fall in revenues, and in July revealed that the average monthly active users in the US had dropped by two million within four months. Snapchat is following in its footsteps.

Since Snap Inc – the organisation behind the disappearing photo app, Snapchat – went public in March, it’s witnessed a sharp decline, losing $443 million (or 36 cents per share) in this year’s second quarter. That compares drastically with a loss of $116 million (or 14 cents per share) just 12 months earlier. Such a tumble begs the question of whether the company can brace the storm, let alone develop into the tech juggernaut many touted it to become five years ago. The answer is most likely ‘no’, and the fact that its competitors are upping their game is at the heart of it.

By notifying users of events, such as a friend doing a live video or another friend posting something after a prolonged absence, Facebook forces engagement. These nudges — which primarily appear in the Facebook app, but can also be pushed to your smartphone’s home screen — keep people returning. Moreover, and perhaps more importantly, Instagram’s “Stories” function – launched in August 2016 has stolen Snapchat’s most renowned feature, found ways to further stimulate its audience (including live video) and now boasts more users than the yellow app’s total user base

The results are telling. Mediakix reported early last month that the world’s top influencers are posting 33% less to Snapchat and 14% more to Stories. Moreover, the marketing firm discovered that between February and August of this year, both the combined and average number of Snapchats posts had declined significantly. By contrast, Instagram stories has accumulated 250 million daily users since its launch, and the app in its entirety has gained more than 400 million daily users as of February. Part of the reason that Snapchat has shrunk and others have grown is due to the fact that it hasn’t incorporated any defensible features, allowing its rivals to reap the rewards. Even LinkedIn has added the story platform.

As a result, Snapchat’s diminutive stature in comparison with the likes of Facebook makes it a less attractive prospect for advertisers and investors, forcing the company to impose cuts, notably at its hardware lab.

Snap CEO Evan Spiegel still refuses to make user growth his business’s primary aim. “There’s a lot of this thing in our industry called growth hacking, where you send a lot of push notifications to users or you try to get them to do things that might be unnatural or something like that,” the American told investors in May. But “those sorts of techniques are very sustainable over the long-term,” he continued.

In fact, Spiegel doesn’t even refer to Snapchat as a social network, rather he describes it as a company determined to reinvent mobile devices and cameras. The ‘Spectacles’ – a pair of smart sunglasses dedicated to recording live videos – was the 27-year-olds first attempt at doing so.

But although it may be popular initially, becoming a manufacturing company whose focus is on producing proprietary goods can eventually prove calamitous; just ask Blackberry. So, whether Spiegel chooses to modify his limited business model or try and find innovative ways to re-grow his user base will ultimately decide his organisation’s future.

Is the yellow app doomed to follow the Twitter decline? It’s already well on its way. Will Spiegel and co. be able to reverse the tide? Only time will tell.

Want more tech news? Here are our 10 media predictions for 2018.