Why sports will be key to Snapchat's future

Wed, Nov 16, 2016, 10:08 AM

On Tuesday, Snap Inc., parent company of red-hot mobile messaging app Snapchat, filed its plans to go public.

Many stories about Snapchat’s plans refer to the app as a “social networking” platform. And that’s true: 60 million daily active users post photos or videos to their own “story” or send photos or videos (or text messages) directly to a friend, and they do it every day. But they also use Snapchat to watch (and read) more curated content, including news, in the app’s Discover channels, from publishers like BuzzFeed, Vice, Mashable, Cosmopolitan, and ESPN. In this way, Snapchat these days looks a lot like a media company. The same has been said about Facebook (the company resists that label), but it’s even more true of Snapchat, which is not just a distribution platform but also creates original editorial content.

And sports content, in particular, has been key to that part of Snapchat’s business.

Snapchat made a deal with the NFL before this football season that gave the NFL the first ever sports channel in Snapchat Discover.

The two-year partnership means the NFL creates exclusive clips and adds them to the channel for all 256 regular-season NFL games. The original content includes highlights, behind-the-scenes videos from teams, and commentary from NFL Network broadcasters. And it’s not limited to video: the channel also has full text articles, quizzes and games. The NFL now employs people to shoot Snapchat video at the primetime games.

Even before that launched, the NFL was the most popular sport on Snapchat, sources close to the company have told Yahoo Finance. The app already had public “Live Stories” from 30 NFL games per season, consisting of user-submitted videos from the games, as opposed to more curated, professional content.

Last season, 65 million unique Snapchat users viewed one of those NFL live stories, according to Snapchat. Forty percent of those viewers were outside the US, which speaks to the popularity abroad of both Snapchat and the NFL.

Football fans can’t (yet) watch an entire NFL game on Snapchat. (This season, Twitter bought the right to stream 10 Thursday Night Football games.) But by viewing a Live Story from a game, they can see fan-shot videos of every touchdown and field goal, basically amounting to an amateur SportsCenter game recap. On the Discover channel, they can read about stats or quirks of certain players, giving them a more personal, inside look into the sport. Using just Snapchat, a fan can consume a pastiche of video, photos and text that gives them the story of a football game.

NFL on Snapchat Discover

It’s not a stretch to argue that the increased availability of these little bits and bites is having an impact on ESPN’s subscriber loss (in October, according to Nielsen, 161,000 homes cut ESPN) and on the NFL’s ratings, which have fallen for every primetime game of this season but two. ESPN is, for now, the only other sports-focused Discover channel besides the NFL, and ESPN digital chief John Kosner specifically pointed to its Snapchat channel as a sign the network is still resonating with young audiences.

Snapchat itself has said that in 2015, more people watched college football on Snapchat than watched it on TV. To be sure, the minutes viewed may not compare, and a real college football fan would hardly get the same satisfaction from viewing Snapchat clips that they would from viewing a game. But studies have suggested that many millennials, who may not feel a burning need to watch a whole game, get enough of a fix from quick-hit clips on an app.

And Snapchat has already proven its power at reaching those users. The company says it reaches more than 40% of all 18- to 34-year-olds in the US. The average cable network reaches just 6% of that demographic. In other words, Snapchat is absolutely stealing eyeballs from traditional sports cable networks.

According to reports based on leaked documents, Snapchat will generate around $365 million in ad sales this year, and expects to see $1 billion in overall revenue in 2017. A report from eMarketer estimated that 43% of Snapchat’s ad revenue right now comes from selling Discover real estate to brands and publishers, and 27% comes from looping ads into its Live Stories.

In both settings, some of the most-viewed content is sports. Original, sticky sports content is a considerable part of why Snapchat can justify an eye-popping $25 billion valuation. As the fragmentation of traditional sports television continues, sports content will continue to play a key role in Snapchat’s growth plan once it hits the public market.

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Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology. Follow him on Twitter at @readDanwrite.

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