Why Snapchat's Disappearing Content Matters to Hollywood

Snapchat_Sad_Ghost - H 2015

Snapchat_Sad_Ghost - H 2015

As the hot messaging app shutters its studio only nine months after it launched Snap Channel, online creators see a potential ripple effect: "It's just the first of many."

This story first appeared in the Oct. 30 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.

Now that Snapchat's original programming push has disappeared as quickly as its messages do, content creators are debating the potential fallout.

Nine months after the Venice, Calif.-based messag­ing app launched the Snap Channel for daily editorial and videos such as its Literally Can't Even series, Snapchat abruptly shuttered it Oct. 12, laying off most of its staff and bidding farewell to Marcus Wiley, the Fox comedy exec hired to run the initiative.

Insiders say the channel, which was launched as part of the Discover platform (which also works with such publishers as ESPN and CNN), was an experiment that generated insights about its young users and that the Evan Spiegel-led company doesn't plan to give up on content. But media observers say it's no surprise Snapchat left creative endeavors to experts. Video content is costly to make, and Snapchat — despite its $16 billion valuation — generated only $3 million in revenue for most of 2014. "Snapchat is just one of the first in what will be many online programmers that will have to cut back on original programming expenditures as bud­gets get tightened after seeing a very small return on investment," predicts communications professor and author Stephen Winzenburg. Instead, says Peter Csathy, CEO of consulting firm Manatt Digital Media, Snapchat may elect to strike deals with content companies as it has done for Discover. "Technology companies historically haven't been in the storytelling game, and it's a different skill set," says Csathy.

Snapchat's move away from originals comes as other tech companies seek to deepen their ties to Hollywood. Apple is exploring whether to buy content for its upcoming streaming service, and YouTube has tapped MTV alum Susanne Daniels to oversee its originals initiative. But there have been notable flops, including Microsoft's short-lived Xbox Entertainment Studios, which shut down in July 2014. Will Snapchat's decision to abandon entertainment content make it more difficult for others? Says Tom Taulli, author of How to Create the Next Facebook, "It's certainly not going to help."