CNN’s Move To End Its Snapchat Exclusive Show Is A Setback For Snap

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CNN has decided to stop producing its Snapchat daily news story, which launched just about four months ago. CNN was one of Snap’s original partners for the Discover program, which launched in January 2015. While CNN was paid licensing fees under its original agreement, which likely helped it to cover costs and reduce risks, these fees are set to end, per the Wall Street Journal. This means that the only source of revenue would come from ad sales, and CNN apparently doesn’t see a clear path to profitability via this model. Although CNN said that it would continue to experiment with Snap and publish on its platform, the developments might be viewed as a setback for Snap, which has been offering more TV-style video content as it tries to monetize the quickly growing mobile video space.

Trefis has a $15 price estimate for Snap, which is about in line with the current market price.

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With the number of digital platforms expanding, publishers need to select which platforms on which they want their content. While Snap’s platform has some advantages, including access to its young and highly engaged user base that is becoming difficult for media companies to reach via conventional channels, there are some downsides as well. Content providers typically need to produce bespoke content for Snap, which can cost upwards of $6,000. For instance, Snap’s video content is vertically oriented, much like the rest of its app, and most shows are subtitled, given that many users watch content with the sound turned off. Other platforms use more conventional formats, allowing for a significantly larger library. Competition for video ad dollars is also mounting, with Snap’s key rival Facebook (NASDAQ:FB) betting big on this space. The social media behemoth has an audience that is more than 10x as large as Snap’s, making it a more appealing platform for content creators and advertisers seeking greater reach. Facebook also has much deeper pockets, allowing it to invest upfront in the TV-style video. Moreover, Facebook has adopted a fast follower strategy, steadily copying Snap’s best features across its apps over the last year, and there is a possibility that it could copy Snap’s approach to videos as well.

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