Snap and NBC Launch a New Content Studio Together

Background:

Snap Inc. is launching a new digital content studio in partnership with NBC Universal to produce original content designed to be consumed through Snapchat, signing up independent filmmakers Mark and Jay Duplass as its first creative partners.

Details and Implications:

The studio is jointly owned by Snap and NBCU and the deal marks a new era in collaboration between the two companies, with the two having worked to produce original short-form shows for Snapchat including NBC’s offshoot of The Voice – which was Emmy nominated and also follows NBCUniversal’s $500 million investment in Snap at its IPO.

There are two major forces at play here. The first and most specific to Snap is that the company needs to find new ways to continue to innovate, because every time it comes up with a new feature it is cloned by one of its competitors that already has larger scale, such as Facebook Watch, a way for users of its platform to access quality content inside its ecosystem much like Snapchat’s Discover platform. The second, and greater force at play, is the changing landscape of content creation, funding and licensing that is being shaped by the migration of viewers from broadcast channels to social viewing platforms and OTT services.

Digital platforms including Snapchat, Facebook and Google have fragmented the viewing of the broadcast players as more people migrate to spend their viewing time on these platforms following their rapid growth, speeding this process by launching services to enable broadcasters to share their content on the social platforms where the viewers are spending their time, leading them to spend even more time there. This fragmentation of viewership has been further exacerbated by the success of OTT services such as Netflix and Amazon Prime – taken together this has undermined broadcaster’s ad revenue.

Now the social platforms are moving to become the creators, investors in, licensors AND distributors of premium content. Facebook streams UEFA Champions League, Major League Baseball, Major League Soccer; Twitter streams live coverage of Wimbledon and the NBA; Amazon Prime is the home of the NFL on Thursday night (taking the rights off Twitter and significantly outbidding it in the process); Apple has set aside a $1bn war chest for acquiring and producing original content in 2018 and YouTube has funded its own army of creators on the platform for a few years now, plus Snap and NBCU’s latest play.

However, this is all still small fry as the rights acquired are still 2nd/3rd/4th tier and the really interesting period will be when one of the global marquee rights come on to the market – such as UK rights to the English Premier League and the primary NFL rights in the US, or when Facebook (or Snap) starts investing close to the $5bn-$6bn per year that Netflix and Amazon are currently spending on content.

Summary:

The shift towards more premium, long form content on these social platforms will clearly lead to a significant shift in the way that people use them, the time they spend with them, when they use them, which devices, etc. All of which poses fundamental questions to advertisers about how best to use them in the future and what this means for broadcasters.

Further Reading:

TechCrunch / Variety / BBC

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