Snap is reportedly planning to unveil a mobile gaming platform at its first developer conference set for April 4 in Los Angeles, per Cheddar.
The in-app platform will have a handful of games from outside developers made specifically for Snapchat.
Snap has a good chance at successfully driving engagement with games for two reasons:
- Tencent the world's largest gaming company owns a minority stake in Snap, and has expressed a desire to collaborate on a mobile game.Tencent, which owns Riot Games (League of Legends developer), bought 10% of Snap in late 2017. A collaboration could be especially appealing for Tencent now, as its mobile gaming revenue has dropped due to tighter regulations in China. If the two join forces, Tencents track record of success in mobile game development would boost Snapchat's odds of becoming a serious mobile gaming platform.
- Its users respond well to higher quality, engaging content.Mobile games represent an opportunity to deepen engagement because they drive more intentional interaction, as opposed to whats likely a predominant behavior of aimlessly tapping around or through various content boxes on Discover. Snap has had success with providing higher quality content in the past year: For example, Snap CEO Evan Spiegel said on the companys Q4 earnings call that premium content likely related in part to Snapchat Originals shows helped Snap to more than double its ad revenue generated from premium content year-over-year.
Weve become more confident that Snap can revive itself after a lackluster year following its botched redesign, and a significant piece of that revival could come from mobile gaming.While we continue to believe that Snap is a niche product that will never scale to the heights expected at its IPO, we believe it can succeed by deepening engagement among the users it does have.
Snap has likely been plotting to launch in-app games for some time now, which gives us confidence that it's actively prioritizing such engagement: Along with Tencent's 2017 investment, last year it acquired an Australian gaming studio called Prettygreat for $8.6 million as well as a cloud-based gaming engine called PlayCanvas . Success in the gaming space coupled with its premium content wins in Q4 could help Snap put its redesign woes behind it once and for all, and help itsbottom line in two ways:
- In general, capturing a piece of the growing gaming pie.Mobile gaming is a massive global revenue opportunity: Games accounted for 76% of projected $92.1 billion mobile app revenue in 2018, per Newzoo. And mobile gaming revenue is expected to reach $106 billion by 2021, growing at a compound annual growth rate (CAGR) of about 20% from 2016.
- In particular, opening up a brand new revenue stream in the form of in-app purchases.Most of Snap's revenue comes from advertising. Gaming will likely enhance that revenue stream, but it could also allow Snap to make money from in-app purchases. And in-app purchases within games can drive huge business: Although its unlikely that any Snapchat game will match Fortnite's scale, the game amassed $1 billion in revenue on in-app purchases in under a year, per Super Data.
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