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Time Warner will spend $100M on Snapchat original shows and ads (techcrunch.com)
88 points by janober 175 days ago | hide | past | web | favorite | 79 comments



Potential follow-up article: Snapchat stock continues to plunge as teens, annoyed by Time Warner ads, leave in droves.


Very possible. Now when you view one your friend's story it ends with an ads.

I don't want to view a publicity for some products right after I see a video of my friends.

It was all fine when they added optional publicity feeds/story you could click on. Since it's forced, I can't see it lasting.


On the other hand Phillip DeFranco mentioned about a month ago that he had recieved an offer from a "big media company" to produce content for them.

It seems very plausible that Time Warner was this big media company. It then follows that if DeFranco is the type of content creator they are looking to to bring on then this new initiative with Snap Inc and Time Warner could prove very successful in bringing in young people to their platform.


In snaps defence, they make it very clear that it's sponsored and you can skip it (immediately) the same way you skip any other story (sponsored or otherwise). It's really not a huge deal in my opinion.


Is it? Half the time I'm watching a friend showing me a quiet video of his pet and then at max volume "HI HAVE YOU HEARD ABOUT THIS PRODUCT?!"

Teens have grown up watching adblocked Youtube and adsless Netflix. Their tolerance for annoying ads is much lower than people who got used to cable TV.


And just like YouTube, that will evolve into "Skip ad in 3 seconds", then ratchet it up 3-5 seconds at a time until it's 30.


It's entirely possible. Teens stop enjoying things their parents are on.


weird idea, don't know how it'd work - what if the original TV content they made is itself rolled into the Ad model. this way the shows would lie in-between your friends content like an Ad placement (in addition to its own dedicated area in the app). existing snap ads already require high production value to grab users attention so in a sense the ads are already a very small show in some sense.


Hm.

Feels like a whole lot of companies are jumping on the Netflix bandwagon with original content.

And here's the thing that concerns me: Netflix, on a tech level, is pretty much a solved problem. There's stuff left to be done for sure, rust never sleeps, but they're pretty much good to go tech-wise. The content side of their business is an existential struggle, and getting original content right is IMHO a do-or-die proposition for them. They did a pretty damned good job because they have to.

All these other guys, they see Netflix doing a really good job on original content, and they want to duplicate the success. Which is understandable, but can they devote the focus at the top level that is necessary to do the job? Or are they going to half-ass it with the expectation that running a content studio is something any idiot liberal arts major can do?

Snapchat, for me, isn't in the TV game and shouldn't be. Nor Apple. And the results of their experiments are about what I'd expect out of a couple of big companies messing around with original content.


The story from Netflix seems to be that there is still enormous room to expand in the content side and in fact their business model is to make even more room, by having more niche programming as well as the binge-watching thing.

Also it was interesting to hear Reed Hastings basically say that as a tech company Netflix might not have too long an independent life but if you look at it as a rival to Disney it could be a hugely successful independent company basically forever -- and that he himself likes that idea. IIRC that was in an A16Z interview but I'm not sure.

Anecdotally: I don't watch "regular TV" but I do subscribe to Netflix, and I buy a lot of shows on my Apple TV (quality and reliability beat cost, for me). I recently subscribed to ShowTime just to watch the new Twin Peaks; maybe I'll stay after that, maybe not. I've thought about ditching my Netflix account because where I am it's sloooow, but every so often they have some awesome original content I can't find elsewhere, and I stay.

I'm sure I overspend, but I probably spend $100/mo on "stuff on TV." I'm sure a lot of other people do too. And my commitment to spending it on one thing versus another is really minimal.

I don't know if Snapchat will be good at the TV game, but I do know that just like Valley companies tend to "get" software more than LA companies do, the opposite is true of entertainment; and Snapchat has shown they have at least some clue what "the kids" want, which is a pretty huge deal.

If I were a media exec I would definitely want some kind of deal with Snapchat, if only to hedge my bets against the (to me, as a grownup) unknown.


What would somebody from NBC be looking to get out of Snapchat? I admit fully that I'm too old for Snapchat-- I don't want my stuff to disappear, I don't do anything embarrassing and I forget enough crap already. Is it just eyeballs? Why does Snapchat want to host a TV show? Is it going to disappear? I grew up with the whole "must see TV" thing, where if you weren't in front of the TV when Seinfeld came on, then you weren't gonna see it. It fucking sucked, to be blunt. Who would want to go back to that? And if Snapchat is just putting tv shows into the app because disappearing snap whatevers aren't enough to drive whatever number they need to drive, what competitive advantage are they going to use to go after the many, many, many content players already in the mix?

The whole thing just leaves me scratching my head.


Same thing when Microsoft launched Xbox One in 2013. They talked about TV content that they would be investing in. I was just thinking...why are you getting involved in making TV shows?..you and Sony effectively have a duopoly on the console AAA games market...it's a gaming machine, if anything you should be investing in gaming content.


Microsoft have a huge amount of data about exactly what Xbox users do. You might think it's all about gaming but they know that's not the case.


Except that Xbox isn't doing that well in comparison to PS4 because it's a significantly inferior gaming machine.

This years Xbox announcements were thus only about the games.


And it bit them in the ass when Sony pushed games, games, and more games onto the PS4 and have enjoyed being on the winning side of a healthy install base gap ever since.


It's easy to knock them in retrospect, but around the time MSFT was making the decision to produce original shows, the Xbox platform was accounting for a healthy proportion of total Netflix watch time. MSFT believed that this was a key differentiating factor, and that it presented Xbox the oppprtunity it needed to win the war for the living room as a total entertainment console.

In hindsight, we see how that decision looks naive. Xbox was always about the games, and the Netflix consumption was incidental. But original programming wasn't a completely stupid idea on its face back in ~2008-10, or whenever it was. In fact, it's possible they could have succeeded; they just never seemed to be able to get the studio off the ground.


>..., rust never sleeps,...

I am not familiar with this phrase, what does it refer to? Or are you referring to my current favorite programming language and the need for it to go mainstream? ;-)

You can also have another perspective on this: with the lack of investments in moonshots and every less actual work to do, we are now entering the "entertainment industry" phase of our society.

You could argue that Netflix creates the on-demand-video equivalent of long form writing, youtube spans from that to shlock novels and comic books...so with vine gone (it's still gone right?), maybe snapchat or instagram will fill the video equivalent of tabloids spanning to facebook posts.


cough hello rust evangelism strike force cough

Rust never sleeps: the idea that nothing is ever "not needing maintenance." In webdev, this means that even if Netflix is "perfect," it may not remain so if, for example, the Chrome, Firefox, and Microsoft teams all find critical exploits in their browser code that forces a push to up to date and legacy versions of their browsers that breaks the netflix video viewer, or whatever.

No matter how well you paint a bridge, the rust will find a way in.


> cough hello rust evangelism strike force cough

we also never sleep ;-)

thanks for the explanation...it will be interesting how netflix will handle it. The "reasonable thing" to do would be to either a) plonk all of those "superfluous" engineers into creative fun mode ala xerox park or b) set them onto formally verifying the stack and then sack them slowly/stop hiring, at least as far as can guess from the outside of the entertainment industry? Though handling 3D/VR+developing teldedildonics (does netflix do adult content?) might give the techies continued legitimacy


I don't know, but I am definitely stealing teledildonics from you.


The phrase is old and refers to needing constant maintenance on anything (because rust and decay never stop), but it was probably most popularized by the Rust Never Sleeps album. Its closing/opening tracks: https://en.wikipedia.org/wiki/Hey_Hey,_My_My_(Into_the_Black...


haha, literal rust. Everything is decaying, all the time. Entropy never sleeps, to paraphrase.


Tech wise I don't know. I used to think so but on my main device (shield TV) I cannot reliably watch it any more. They have been largely unhelpful in getting it working and seem to refuse to roll back the software to a working version. The latest shield update even removes my previous ability​ to pin the working version.

They no longer, to me, have a working streaming service.


If they're poaching top tier YouTube talent then they might not have to worry about getting the content right because the market has more or less already selected for them.

DeFranco mentioned that a top media company had made him an offer about a month ago.


Astonishingly for a solved problem, Netflix still spends over 800M$ a year on research and development. I tend to scratch my head that they possibly get a good ROI on that. I think HBO's entire content budget is ~2B$ for comparison.


"Snap will take 50% of the ad revenue generated by these shows and the content partners will keep the other half"

Pretty interesting. Anyone know how this split compares to what FB is offering its partners to make original video content?


Think FB pays fixed sums for live content [1]. E.g. Buzzfeed 3.1 million $. Not sure about other (ad) revenue shares though.

YouTube is 55 (you) 45 (tube) [2].

[1] https://www.wsj.com/articles/facebook-signs-deals-with-media... [2] http://www.investopedia.com/articles/personal-finance/032615...


Awesome Thanks!


Honest question, is this $100M deal even that big for the parties at hand?

Will they spend all of this money on making ads or is this the sum that Snap will actually receive as payment?


Snapchat made $150m in revenue last quarter, assuming a straight 4x multiplication that's $600m in yearly revenue.

Adding $50m in revenue (nearly 10%) per year over the next 2 years is pretty substantial and you can bet the account director in charge of the TWC account is having a good day.


Well, that's it then. Either I'm officially out of touch, or Time Warner is $100M out of touch. Occam's Razor.

Is this what getting old feels like?


$100 million for two dozen bets (plus management fees) to catch 300MM MAU that yields $100k ad slot inventories. 2000 placement a year to break even. 4000 to double ROI.

TWC has skin in the game to explore a new channel. Snap has skin the game to make sure their top notch sales team can close those deals. And a couple hundred kiddie social influencers are gonna get stupid money to play with instead of being on Youtube or Instagram.

Being old is thinking it's just another form of the horse tracks.


"TWC has skin in the game to explore a new channel." <-- IMO, piece that holds it all together. all media cos have a huge interest in finding and maintaining channels-that-are-not-Facebook - newspapers/magazines/print already nearly live/die by FB's feed (mostly the latter...and the living are now trying to figure out ways to diversify, i truly wish them luck!), and TWC needs to figure out a way to avoid that same dependence as video continues to move more and more online. snapchat is not facebook, and that is worth TWC trying to make work!


Time Warner is not TWC. TWC no longer exists.


I don't think you're necessarily out of touch, but you might be looking at it with the wrong lens.

Time Warner is a media company. Their business is creating and monetizing media, either by selling it or by selling advertising for it. Traditionally they did most of it by TV and cable. With the advent of the internet and sites like Hulu and Youtube, Time Warner is also moving online. But that's if you're trying to focus on selling the content.

If you're trying to sell the advertising around the content, then you've got a problem. Traditionally you make all of that money on highly valuable ad placements between segments of your TV shows right? Sports broadcasts, for example, are premium advertising inventory, but in the last few years things have been hurting badly because of increasing numbers of cord cutters. They all went to Snapchat, Facebook, Netflix, Google (Youtube), so all of these tech giants are trying to eat traditional media's lunch. It's a blatantly obvious move with the sports broadcasting agreements that Twitter, Facebook, Amazon, etc. have been signing.

This is Time Warner going "well if you can't beat 'em, join 'em." Better to embrace all formats that would let you reach (and monetize) audiences than to get left in the dust. Snapchat has somewhere around 150 million active-ish users, and your average TV show (not the blockbusters) probably sees somewhere around 5-10 million viewers? So the numbers actually work out in terms of just reach. I'm not so sure about monetization.


I'm with you: 3 shows a day * 5 minutes * 365 days a year * 2 years < 200 hrs of content for $100M

Now express that budget as something relating to advertising budget and profits. Those 200 hrs should steer tens of billions in sales.


Prime-time TV adverts apparently cost about $75k[1]; $45k for a 5-minute show doesn't seem so unreasonable in that context.

[1]: http://www.nielsen.com/us/en/insights/news/2014/advertising-...


Not to mention prime-time TV is just that -- timelocked. The 5 minute show is on demand and can be accessed at 4AM if the user so chooses.


This is hilariously close to an actual scene from The Simpsons: https://frinkiac.com/meme/S05E20/289238.jpg?b64lines=IEFNIEk...


I used to be with it, then they changed what it was. Now what I'm with, isn't it and what's it seems weird and scary. It'll happen to youuuuu.


I would say that the company that merged with AOL in 2000 is probably the out of touch one.

That said, I always thought that their "subscribe to all of the really old video games" service, GameTap, was a fantastic idea that really shouldn't have crashed and burned like it did.


Snap is just another channel.


This comment is underrated. It's the next generation of media distribution.


I'm 24, I think Time Warner is out of touch. Or maybe I'm old too


Vertical video by the pros.

I wonder if large portrait displays will become available again.


> I wonder if large portrait displays will become available again.

Monitor stands for LCD panels that support rotation (and video drivers that do the same) have never stopped being available.


Crystal polarization always makes the viewing in portrait quite odd


What's the difference between that for desktop displays and a handheld display that we frequently reorient without complaint? The smaller range of viewing angle? Different technology?


Text has many almost vertical oblique lines, but few almost horizontal ones. On non-retina displays Cleartype is more useful with vertically oriented sub-pixels.


I must say I've never noticed but my old Samsung monitor explicitly came with a rotatable stand, so maybe it was designed for both.

rant: can people taking eyewitness videos please shoot in landscape? It's one thing to view portrait on a phone but when your footage gets picked up by global news, billions are watching your 15 seconds of fame on a widescreen TV!


On TN panels, yes. IPS panels aren't so bad.


True. The angle of refraction tends to be pretty awful on rotated screens. I've got a benq that appears shadowed when I rotate it long ways.


> I wonder if large portrait displays will become available again.

Turn display sideways?


Ha :)

I guess I'm one of the few hoping fixed orientation landscape laptops recede as tablets gain traction.

A portable tripod mount that flips to portrait would be far more convenient for A4 documents than a form factor that hasn't changed since the 90s.


More likely: This will flop and won't be on any displays


So on the front page [1] it looks like there is a extremely similar deal with CNN and Facebook. And CNN isn't that keen on playing ball with Facebook. The revenue sharing seems to be because the fact that Snap isn't playing from a dominant position. What makes this different revenue sharing? [1] https://www.bloomberg.com/news/articles/2017-06-19/media-com...


I mean, i could see this being attractive to me if they have daily stories of behind the scenes. Basically just short clips of actors goofing off or sets/props being made and tested.


„...This deal comes at the perfect time for Snap...“

Yeah what a coincidence.


Next week: Netflix buys Time Warner, cancels Snapchat deal.


Would be quite the interesting merger.


What an incredible waste of money


Why? Just because the shows are delivered through Snapchat?


Yes. I think that is exactly what moolcool is saying. And he's right. Instagram's (typical users) daily active users just surpassed 700 Million. And the Stories daily active users just surpassed 375 Million [1]. Now Facebook has a juggernaut of ad targeting for very specific audiences.

Now if you TW, where would you rather spend your $100 Million on original content and shows? A fully-sustained cruise liner ($FB) or a rapidly sinking dingy ($SNAP)?

Sidenote: if any shareholders since the IPO are reading this, sell now. Not only are your shares non-voteable [2], but they are as ephemeral as Snap's users. Get out while you can.

[1] https://techcrunch.com/2017/04/26/instagram-700-million-user...

[2] https://www.recode.net/2017/2/21/14670314/snap-ipo-stock-vot...


> Now if you TW, where would you rather spend your $100 Million on original content and shows?

That depends on the nature of the content and who you were trying to reach.

If they want to reach me, put it on YouTube or Vimeo. My kids? Snapchat. My parents? Put it on Facebook or cable TV.

Plus, just because they are pouring $100MM into Snapchat doesn't mean they aren't also placing big bets on other platforms.


imo yes that is why.


Active attempt at screwing future generations' attention span!! 3-5 minute shows, ohh well.


what in the shit is a snapchat show.


You know when you swipe right one time too many and your screen is filled with ads? Click on one. That's a Snapchat show.


Somewhere buried in the UI (god knows where, but I've seen other successfully navigate to it) are "stories," like you see for your friends, but from not-your-friends. I assume this is where the Time Warner stuff will go.


lol wtf


But they're a monopoly. Can't they just take $100M and make my bill smaller?


Bet it's fake - saying you are going to spend $100m ad actually doing it are two v different things. Snapchat has already had all its features ripped off by the Faceberg empire and has a fraction of their eyeballs...


Snapchat has a certain demo cornered though. Kids aren't using Facebook like their parents are; it's a brand thing more than a feature thing.


...for now there is a small number of of 'kids' using snapchat, but I suspect it will never hit critical mass and will be a fad platform. I know a lot of middle aged marketing types constantly using Snapchat, seeing if it make them money (even if it's just speeches about it to other marketers..)


I wish I were in the position to call 300m+ monthly active users a "small number of kids"


I have a hard time believing that number of 300m...


I dunno about that, I have a lot of friends who use Snapchat for the filters and low-friction 'waves' at friends but still use FB for more conversational purposes


Snapchat has some useful popular features, but does it have a wide enough functionality it be where anyone "lives" online?


That's the thing though, the user base is largely a bunch of high school kids that go to the same school - they likely see each other daily. They don't need to "live" anywhere and to the contrary, they don't want to post a bunch of shit their parents are going to see.




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