Reports indicate that Snapchat is expanding and launching a new gaming platform in efforts to further enhance revenue streams and lengthen in-app usage and engagement. There is no official announcement but the offering is expected to launch later this year.
Details and Implications:
According to reports, Snap will allow third-party developers to create games to offer within the Snapchat app. This move follows in the footsteps of WeChat’s gaming business model, that allows in-app game purchases and which has been extremely profitable for Tencent, the world’s largest gaming company by revenue (Tencent sees almost 40% of revenue coming from in-game purchases). Tencent was an early investor in Snapchat and increased its stake in the company, with an SEC filing in November 2017 revealing it had acquired shares equal to 12% of the company. Tencent’s full holding of Snapchat shares is not known.
Snap’s new gaming launch will help increase time spent in-app and user engagement, (which has been a known problem after recent redesign snags) as it is reported that users will be able to browse, search, play and download a variety of games without having to leave the app.
The social media platform’s future gaming hub could potentially pull users away from other gaming App stores like the iOS App Store and Google Play as well as rivals like Instagram and convert occasional users to regular ones. Instagram currently has around three times the daily active users as Snap so Snap will be hoping a new gaming offering will close the gap.
With global gaming brands now becoming more common – Fortnite being just the latest example – and their reach extending way beyond the core gamer community, brands will be welcoming another platform that engages their consumers.
With the recent investments in their Lens Studio and launch of Snappables – Snap’s AR-based games that allows users to control the play with facial expressions – it would make sense that Snapchat focuses on AR gaming, which would be a unique proposition for brands and advertisers looking to enter the gaming space. In-app gaming platforms are not new, but highly profitable. Advertisers should keep a close eye on official announcements to see how Snap’s future gaming plans will help differentiate its platforms from the competition.