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Snap Unveils Snap Originals, Targets Vertical Viewing Audience

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Snap (SNAP - Free Report) recently launched its original slate of content, Snap Originals, on Snapchat.

Snap Originals, featuring a combination of “scripted series and reality shows”, are mainly targeted for the vertical viewing mobile audience. These are expected to be five-minute videos, with daily episodes, per Sean Mills, Snap’s head of original content.

The new titles currently available are Co-Ed, Class of Lies and Endless Summer. The titles can be accessed from the Discover tab of Snapchat.

Snap Inc. Revenue (TTM)

Snap Inc. Revenue (TTM) | Snap Inc. Quote

Can Snap Originals Boost User Engagement?

Snap Originals with its unique features like Show Portals, lenses and filters is expected to attract users. Reportedly, Snapchat is more popular among teenagers than Facebook (FB - Free Report) .

Show Portals, with the help of augmented reality (AR), allows users to experience the show by being part of it. Moreover, with Snap lenses and filters, users can enhance engagement with the platform by sharing their experiences.

Further, Snap is expected to monetize Snap Originals by including two to three six second ads in an episode that cannot be skipped. This will help the company bring in ad dollars, which constitutes the major chunk (99% of total revenues in the last reported quarter) of revenues.

Prior to launching Snap Originals, Snap partnered with the likes of Comcast (CMCSA - Free Report) owned NBC Universal, BBC, CBS and Viacom among others to bring over 60 exclusive and non-exclusive shows.

We believe such initiatives from Snap will further enhance user engagement and boost time spent on the platform, which has already tripled this year so far, per TechCrunch.

Competition Stiff

Snap’s main competitor Facebook is also increasing its video-streaming initiatives with plans to spend up to $2 billion to create and produce content on Facebook Watch. Notably, Watch provides users with video content like entertainment, news and sports among others.

Moreover, competition from other streaming services like Netflix (NFLX - Free Report) and Amazon is intensifying with the companies producing award winning content. Further, with Apple, Walmart, AT&T and Disney’s entry into the streaming space, efforts to grab competitors’ market share will increase, which does not bode well for Snap.

However, we believe the initiatives like the Snap Originals will boost user activity on the platform.  Snap’s CEO seemed confident about driving the company to profitability in fiscal 2019, per a leaked memo.

Snap currently 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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