Per a recent article by TechCrunch, Snap Inc.’s (SNAP - Free Report) messaging application Snapchat has added Walt Disney (DIS - Free Report) owned sports television channel ESPN’s SportsCenter show to its platform.
Users can view the “short-form version” of the show spanning three to five minutes twice daily on weekdays and once on weekends. The sports show will cover topics related to latest news, highlights and commentaries and will be hosted by eminent sports personalities and anchors.
Snap’s association with ESPN dates back to 2015 when the messaging app launched the Discover feature on its platform. ESPN has been one of the media partners for the company and has been creating short videos or Stories for this section.
Per the latest two-year deal, revenues from the show will be shared between the two companies. However, Snap declined to provide any other information pertaining to this.
Notably, shares of Snap have lost 49.4% of its value since its listing date of Mar 2, 2017 against 17.9% growth of its industry.
Focus to Expand User Base
Snap’s problem has been its sole focus on the younger demographic. The company undoubtedly is quite popular among that demography but the failure to attract the older generation (above 34 year olds) has been a major headwind.
We note that over the last few quarters, Snap has been experiencing a slowdown in its user growth rate. Snap’s slowing user growth is attributed primarily to the surging popularity of Facebook’s (FB - Free Report) Instagram. While Snap’s daily active users (DAU) is 178 million, Instagram has 500 million DAUs.
Moreover, per Piper Jaffray’s report, Snapchat doesn’t enjoy a “unique user base” as 90% of the users also use Instagram.
On the last conference call, management called for a change in focus to attract users above the age of 34 to expand its user base. Snap is also redesigning its app to draw more Android users and people from the international quarters.
We believe that with the launch of this show, the company might be able to catch the attention of the older generation who are more likely to watching ESPN shows.
Per ESPN’s executive vice president of content Connor Schell, anchors like Katie Nolan, Elle Duncan, Cassidy Hubbarth, Jason Fitz and Cy Amundson will “collectively bring a new style, energy and substance that I believe will connect with Snapchat’s audience in a real way.”
The company’s other collaborations with media giants like Time Warner Inc and NBCUniversal to produce scripted shows for the platform are also expected to broaden user base and increase user engagement on the platform.
Currently, Snap carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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