Recently, Snapchat is under fire as the response to their update has been anything but positive. With all the negative user reviews, one might think that Snap would consider retracing its steps and return to its old platform. However, the company has shown no signs of this retraction as Ceo and Founder Evan Spiegel said, “We’re excited about what we’re seeing so far,” and continues stating “The best part is that even some of the complaints we’re seeing reinforce the philosophy [behind the design].” As you can clearly see, he completely disregarded the hate the update has been receiving and the 1.2 million people that have signed the petition to change Snapchat back to its prior form.
It leaves people asking the question, “Why does Snap keep the new update if no one likes it?”
The answer to this question: revenue.
Although Snapchat currently has 187 million daily users, it is and has been losing money for years.
Snapchat’s stock has finally started to rally as it posted record breaking fourth quarter earnings on February 6, 2018, of 285,693 million dollars, however, the company still lost 28 cents per share or 159 million dollars. Despite the hate regarding the new update, the update itself looks like it could continue the uptrend in Snap’s sales.
A lot of people have been outraged with the way Snapchat’s signature story feature is now positioned on the left side of the app which makes it much harder to rewatch stories. Personally, we don’t like it either, but will it make us and our friends stop using the app? No! The reason being is our streaks are way too valuable to throw away because of an update.
The new update now leads the consumer to the right side of the app, where the stories used to be. This whole side of the app is now dedicated to the discover section. This is where Snapchat makes most of their revenue, as there is a lot of sponsored content from companies, and many ads in between the content. Additionally, a slight but important new feature to the app is that when a particular story or headline is over, it doesn’t take you back to to the displayed section of news, instead, it goes right to the next popular story, headline, celebrity sighting, or sporting event, keeping the user engaged, and more importantly presenting them with more ads.
How will Snapchat’s revenue be affected by the new update?
We believe the new Snapchat update was designed as a way to increase ad revenue. While increasing ad revenue, this new update has received an echoing negative response from many Snapchat users. Will this lead to a significant drop in Snapchat’s huge daily user base? If so, will the new revenue model in the update make up for the lost users?
Let us know your thoughts on this bold move from Snap.
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