Snap Inc. has inked a $100 million deal with Time Warner’s Turner cable channels and Warner Bros. studios for up to 10 original shows a year for the platform. The big studios and traditional TV companies see Snapchat as a way to reach its younger demographic, which is much less likely to subscribe to their premium channels. For example, HBO now has a path to creating content for Snapchat, and scripted drama and comedy are among the genres considered for distribution via the deal. Snap’s shows typically run three to five minutes.
The Wall Street Journal reports that the deal “marks one of the largest show development deals Snap has landed to date and shows how Snap is attempting to reinvent television for young, mobile users.”
“You can envision a lot of really compelling marketing and programming that will drive viewership to our television and film content and new users for our emerging direct-to-consumer services,” said Time Warner executive Gary Ginsberg.
The specifics of the deal include “Time Warner’s show investment for the app as well as an advertising commitment from HBO, Warner Bros. and its Turner networks.” Snap and its content partners will split the advertising revenue 50-50. This, says WSJ, is “a less attractive split” than what Snap offered for its Discover platform, where “at least some partners were allowed to keep 70 percent of the ad revenue if they sold the ads.”
Snap chief strategist Imran Khan highlighted how young people 18- to 24-years-old have gravitated to smartphones for entertainment. “These users represent a big opportunity for us because they are harder to reach on traditional media, and they are often highly sought after by advertisers,” he said.
Although Snap’s revenue, which comes almost entirely from advertising, declined sequentially for the first time, Time Warner’s investment is seen as “a vote of confidence” for the new platform, which “has become a darling for traditional media executives who are eager to reach younger viewers as traditional pay-TV cord-cutting accelerates.”
Previous Snap deals for content with big media companies include Comcast NBCUniversal and CBS. Early viewership metrics bode well. Snap reports that viewership of NBC’s “The Voice” on Snapchat is up 45 percent in its second season.