Snap announced today that it has laid off 20 percent of its staff in a restructuring aimed at cutting costs and saving the share price of Snapchat's parent company. Beyond the downsizing of around 1,280 employees, one of the main victims here are Snap-funded originals. Snap will no longer invest in new original programming, though those announced in May will continue to air as scheduled starting this fall.
What are/were Snap Originals? Developed with and paid for by Snapchat, but produced by third-party production companies, there are over 150 of them, including "Addison Rae Goes Home" starring influencer Addison Rae, Meme Mom" starring influencer NicoleTV, and "Coming Out." , in which LGBTQ+ influencer Manny Mua hosts a show reflecting the coming-out journey of six young men, as well as shows hosted by professional basketball player Stephen Curry and Olympic gymnast Simone Biles.
Creators: Eric Benét, Devin Hampton
Stars: Frank Oakley III, Cherrie McRae, Ellen Marguerite Cullivan
Shot in portrait orientation and made for quick consumption, Snap Originals bear some resemblance to the failed content experiment that was Quibi. Other outlets that stumbled on their self-funded originals are Facebook Watch (although it continues to have huge success with the landscape-oriented "Red Table Talk") and YouTube Originals (in which "Cobra Kai" and "Step Up" went on to further success on Netflix and Starz, respectively).
Existing commitments will be honored, Snap said, but nothing will be renewed. However, Snapchat will continue with its first original production, "Good Luck America," which is hosted by former CNN political reporter Peter Hamby and won the Edward R. Murrow Award for Excellence in Innovation in 2017. It will also air shows produced by NBC News. ("Stay Tuned"), ESPN ("SportsCenter" for Snapchat) and E! ("The summary").
Snapchat's curated Discover platform currently features a mix of celebrity-driven reality shows and scripted entertainment programming. According to Snap, more than 40 Discover channels each had a reach of more than 25 million global viewers in the second quarter of 2022. In the future, Discover will continue to offer shows, but not those funded by Snap.
A Snap spokesperson told IndieWire that their content business remained a "top priority," but not the kind of content that costs them money. “Going forward, we will focus our efforts on content created by our partners and by creators,” the spokesperson said.
Snapchat's Spotlight, which is made up of user-generated content, will continue to work. Total time spent viewing Spotlight grew 59% year-over-year. Its monthly active users grew 46 percent and exceeded 270 million in the second quarter of 2022.
Snap CEO Evan Spiegel told his staff on Wednesday that the company's three strategic priorities going forward will be "community growth, revenue growth and augmented reality." Also Wednesday, Spiegel promoted former Amazon Web Services executive Jerry Hunter from senior vice president of engineering to chief operating officer.
Snap's restructuring will result in an estimated $500 million in savings on the "annualized cash cost structure relative to the second quarter of 2022," Spiegel said. It's not just the costs that are out of control: while revenue continues to grow, the growth rate has slowed.
“It has become clear that we must reduce our cost structure to avoid incurring significant ongoing losses,” Spiegel said in his note. He also believes that this massive downsizing will prevent further reductions. Read Spiegel's email to staff here.
Shares of Snap closed Tuesday just above $10 apiece, or less than one-eighth of the highs they reached last September. Back then, Snap's market capitalization was up more than $130 billion; it is less than $18 billion today. SNAP shares rose more than 8 percent on Wednesday.
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