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Growth of Snapchat
Snapchat is aiming to expand its subscription program. They are allegedly testing a “Friends and Family Plan”, a move indicative of social media platforms seeking monetization avenues beyond sales. The report by Android Authority suggests that there will be an addition to the Snapchat+ subscription program, catering to the Gen Z with exclusive features for a monthly fee.
The subscription business is witnessing rapid growth, with Snap’s third-quarter results revealing Snapchat+ surpassing 5 million subscribers, up from 4 million in July. This marks a noteworthy 250% year-over-year revenue increase, reflecting a rising demand for the subscription service.
Despite this growth, subscribers constitute a fraction of the total user base. Snap’s CEO Evan Spiegel mentioned on an earnings call that the third quarter had 406 million daily active users, making the paid subscriber base only 0.01% of the daily active user count. This suggests substantial room for expansion.
New plan for family and friends
The introduction of new subscription plans aligns with Snapchat’s strategy to augment ad and in-app purchasing revenue. A report titled “Tracking the Digital Payments Takeover: Monetizing Social Media” by PYMNTS Intelligence and Amazon Web Services indicates that only 8% of surveyed U.S. consumers made purchases via Snapchat in the previous month.
Industry shift
If we take a closer look at the social media industry as a whole, we notice that other platforms are moving towards paid subscriptions. Recently, Elon Musk revealed that X, formerly known as Twitter, will offer premium subscriptions. TikTok is also reportedly testing an ad-free monthly subscription plan.
Snapchat performs quite well, leveraging artificial intelligence to enhance ad capabilities. The return of brands to the platform indicates a positive trend, showcasing its appeal to advertisers. As the app explores innovative subscription models, it seeks to strike a balance between user growth, retention, and revenue diversification.
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