Given the relative slump that many tech companies, most notably FANG stocks, are experiencing, a new $100 million deal between Time Warner Inc.
The mutually beneficial deal entails Time Warner producing scripted content for Snapchat, jointly developing ten shows per year. Under the deal, Time Warner is also committed to buy ads for HBO, Turner, and Warner Bros. on Snapchat. The agreement has, as of now, been established for two years, but could turn into a far more significant corporate alliance. Time Warner and Snap will split ad revenues from the shows they co-produce, which implies that both will have to invest an equal amount of resources and effort into the endeavor, leaving little scope for inefficiency or tension.
The deal endows Snap Inc. with a much needed regeneration of sorts, as its shares have lost more than 26% of their value since the company went public in March after it reported disappointing user growth numbers.
Results have already begun to show as Snap shares
"This is an exciting and natural move as we bring together some of our leading video properties and brands with Snapchat's dynamic platform," Time Warner marketing EVP Gary Ginsberg said in a statement. "We're confident this partnership will help drive larger audiences to our shows and to the new direct to consumer platforms we continue to rollout."
This isn't Snap's first content deal with a major media company. In March, Snap solidified a deal with MGM to produce original short-form videos. The company also has deals with ABC, NBC, ESPN, the NFL, Turner, the BBC, Vice Media, A+E Networks, and Discovery Communications, among others.
However, what is so promising and unique about this new particular alliance is the notion of originality and creativity. In a concept very similar to Netflix's own production of Netflix Originals, Snapchat is attempting to increase original content to streamline the production process and increase revenue margins by eliminating the need for third party expertise and development. It is also attempting to build up its brand, as other methods of encouraging brand loyalty seem to have been unsuccessful so far, especially taking into account the duplication of features amongst Facebook, Instagram and Snapchat including primarily the ability to display "stories", which was originally solely a Snapchat USP.
Episodes of the shows produced by Time Warner will last 3-5 minutes each and some of the genres under consideration are comedy and drama.
