Snapchat’s Future Lies in Augmented Reality

And its past and present too.

Courtesy of PC Advisor

Shortly after its debut in 2011 the ephemeral messaging startup Snapchat was attracting an impressive number of users — and media attention. Most of the coverage fixated on the relatively uncomplicated observation that the disappearing nature of messages, together with it’s young demographic, made it the perfect “sexting” app.

Today it’s clear that the company and its user base have matured.

In 2013, Snapchat rejected Facebook’s $3B acquisition offer, and is now valued between $10–20B, depending on the source (Twitter’s market cap is ~$17.3B). It is experiencing improbable rates of users acquisition, activity, and fundraising.

Every day, 100M users reach for a goofy yellow ghost icon where they become immersed in snapshots of friends’ lives, Diplo and Skrillex’s new music, or curated content from the likes of Vice, CNN, National Geographic, and ESPN. This translates to 6 billion video views per day on the platform, a figure quickly approaching Facebook’s 8 billion daily video views.

Nobody seems to know what to think about all of this, but it is clear that Snapchat is gunning for the top spot in 2016 and beyond. According to CEO Evan Spiegel, 70% of it’s engineers are working on new products, some of which will continue to change digital communications as we know them.

If Snapchat is here to stay, then I want to analyze its product and market strategy, not the gossip and buzz swirling around it. This is my take on Snapchat’s experimentation with Augmented Reality (AR) and why it’s not a sideshow for the company, but a core feature of the platform.

Look no further than the ‘lenses’ feature. This is the playful introduction of AR into your life.

Lenses overlay animations onto a user’s face, distort real-time video, and react when a user opens their mouth or blinks their eyes.

Snapchat’s lenses feature. Courtesy of Snapchat.

As notable as the lenses themselves:
1. You can now purchase premium lenses for $0.99 each
2. Brands are signing up for sponsored lenses designed by Snapchat. Sign ups have already led to $10M in commitments for 2016, keeping the company on track to bring in $100M in revenue next year.

This is huge. As far as I know, Snapchat is the first to successfully commercialize consumer AR. Better yet, this is proof that AR can be successful on devices that people already use.

But AR has been a core feature of Snapchat all along.

Since the beginning, users have had the option to wield a simple color palette to decorate or annotate messages before sending them. It’s the Kid Pix of AR, but it still fits the bill, right? Plus — let’s not forget that we went from Kid Pix in “computer class” to Photoshop on the iPad, synced to the cloud.

Most importantly it differentiates the service from other messaging platforms and gives Snapchat a distinct character. Nobody else thought to add this brilliantly quirky feature.

Sidenote: the accessibility of these images on Google should be a reminder that no snap is immune to screenshots.

None of these photos would have the same meaning without the additional annotations and illustrations. The humor, references, and expression in these messages are directly tied to the ability to augment reality.

Lastly, let’s talk about filters. ‘Geofilters’ are unique illustrations that can only be used in certain locations. Other filters can show the temperature outside, your phone’s battery life, and even your speed. This contextual awareness is powerful.

Here’s me thinking hard about geofilters in a coffee shop (I guess a piece on Snapchat wouldn’t be complete without a few selfies):

I don’t usually do this I promise.

In addition to standard color filters, you’ll see the speed and temperature filters in the first row. The next three are only available in San Francisco. I’ve been shocked to see unique illustrations for towns in rural Virginia. There must be thousands of these exclusive to scattered pockets of the world.

Next, there is a filter sponsored by Retail Me Not — Sponsored filters are another monetization strategy used by Snapchat.

Finally, check out the last filter. December 1st is World AIDS Day, and every photo sent with this overlay on 12/1 was matched by the Bill and Melinda Gates Foundation with a $3 donation to (PRODUCT)RED. If just 1% of Snapchat users selected this filter, the group would raise $3M.

If you buy into the notion that contextually-aware filters (i.e. location, date, time, weather, speed) placed upon snapshots of reality are an application of Augmented Reality, then Snapchat isn’t just profiting from AR, it’s also using AR in tandem with messaging to redirect money to a charitable cause.

Some of this may seem like a stretch, and it’s hard to say to what extent Snapchat will pursue AR applications beyond it’s current endeavors, but there’s one last bit of telling evidence.

Sony’s CEO Michael Lynton is a board member and trusted adviser to Evan Spiegel, founder and CEO of Snapchat. When Sony was hacked in 2014, much of their correspondence became public. In addition to revealing market strategies, usage numbers, and financial data, the leaked emails brought to light several of Snapchat’s acquisitions which had previously been kept secret.

In 2014, Snapchat bought Vergence Labs for $15M. Here’s the product behind the acquisition:

Interesting, right? Up until now, not too much of what I discussed is commonly considered the realm of AR. “Smart Glasses” on the other hand are prime territory for heads-up displays and other AR features.

Surely AR isn’t the whole story here. Snapchat is also making moves to incorporate payments, curated media, text messaging, music, and advertising into its platform. I could write a post on each of those but to me Augmented Reality is the most interesting (and overlooked) area that Snapchat is dipping it’s toes in.

My take is this:
While Microsoft, Google, Facebook , Alibaba, and Asus hastily prepare for AR/VR to take off in 2016, there’s a sly little ghost meandering about, walking through walls, slinking past giants with their heads down, and playfully guiding the next generation along the path to a more augmented reality.

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