Snapchat is this instant message service that allows you to send a picture or video (up to 10 seconds) to another with captions. When they view the picture or video, it is deleted from the server. You can also do short stories, which are also removed after 24 hours.
Snapchat seems to be a good idea, but the reality is the service is not proprietary. That means I could open up a similar service and take all of their business away (which at present has 26 million users).
Facebook offered $3 billion for the service, which Snapchat has declined. This seems to be the companies’ 2nd attempt to buy the service – according to WSJ. So it is possible that Snapchat is holding out?
Just over a year ago, Instagram was in this same position. They ended up snapping up Facebook’s offer at the $1 billion range. They had to of known Facebook was planning to compete, therefore making Instagram a dying commodity. Their 30 million users were sold at .33 cents a user. Still, one has to wonder if Instagram could have held out for more.
There is also reports that Google offered Snapchat $4 billion for the service, which they also turned down. This would have been better for the company anyway, since they are hosted on Google Cloud servers.
The biggest problem with this chat service is their main feature – they delete everything. If you see a picture, you can’t reference it after. If you read a story, it’s gone after 24 hours.
What Facebook and Google are buying is the user base Snapchat has amassed. Their demographic is 14-21 year olds which are leaving larger social networks already.
But is this user base worth $1 per user?
There is no ad model. The retention period gives you nothing to search on. And while Twitter suffered a lack of ads for the longest time, they had the ability to take one tweet and send it to millions. Snaps don’t go past the original group it was sent to.
Snapchat is an interesting concept that – right now – is infused by a few good investors ($75 million to be exact) . Unless the service can start an ad model or even put a patent or two into the service, I don’t see this sticking around too long. Especially since Facebook wanted it and can’t get it. They might come back with 4-5 billion , but if that falls, you know they’ll working on their own version (if they’re not already).