Snap plans to lean into MyAI chatbot, partnerships to fuel time spent with Snapchat

The news: Snapchat+ now has 3 million subscribers, Snap announced at its annual partner summit held on Wednesday in Santa Monica, California.

• In an interview with journalist Kara Swisher at the event, CEO Evan Spiegel said that Snap’s “medium-term” goal was to reach 10 million subscribers.
• In a leaked internal memo published in September, Snap had plans to reach that milestone by Q4 2023 and generate $350 million in Snapchat+ subscriber revenues this year.

The MyAI effect: It took Snapchat+ just six weeks to reach 1 million subscribers after launching in June 2022, but growth slowed shortly after. Snapchat+ didn’t reach the 2 million subscriber mark until January 31, meaning that the final 1 million subscribers signed up in the past 11 weeks. MyAI, Snap’s generative AI chatbot, was released to Snapchat+ subscribers on February 27.

• At the event, Snap said that MyAI will soon be available to all Snapchat users for free.
• MyAI is also getting a host of new features, including the ability for users to send AI-generated “Snaps” instead of mere text queries, get recommendations for places on Snap Map and Lenses, and incorporate the chatbot into group chats.

Yes, but: Snapchat+’s growth is impressive, especially when compared with other social subscription services like Twitter Blue and Meta Verified.

• Still, subscribers still only account for a fraction of the 750 million monthly active users (MAUs) Snap reported in February.
• At $3.99 per month, 3 million Snapchat+ subscribers would bring in under $150 million in annual revenues.

Plus: Now that MyAI will be available to all Snapchat users, Snap will have to come up with new features to make the monthly fee worth it. Spiegel demoed an upcoming subscriber-only MyAI feature that sends AI-generated “Snaps” back to users, which received audible enthusiasm from the audience.

The big picture: While the value-add from MyAI for Snapchat users is clear, generating engagement has never been Snap’s problem.

• Despite increasing competition, Snap is consistently able to squeeze daily active user (DAU) growth—17% year over year in its most recent quarter.
• Turning engagement into revenues remains a struggle: Snap expects a year-over-year decline between 2% and 10% in its Q1 2023 revenues, which will be released April 27.

Increasing stickiness: Speaking of DAU growth, Snap is leaning into partnerships to ensure that its users remain highly engaged with the platform.

• The company announced agreements with HBO, Sony Pictures, and NBCUniversal, among others, to create exclusive content for the platform.
• Snap is partnering with Shopify to integrate shopping tools directly into Snapchat.
• The company is partnering with Live Nation and musician Kygo, and plans to expand its AR features to 16 additional music festivals.
• Another new feature is “Instant Games,” which will allow users to play games directly within the Snapchat app.
• Snap is partnering with over 30 publishers to create a “Stories Marketplace” that will allow advertisers to purchase sponsored content from publishers.

Coming soon: For more on Snap’s announcements around MyAI, creators, and retail AR, look out for our upcoming report, “Snapchat Partner Summit 2023: 3 Key Takeaways for Marketers and Retailers, and What to Expect for Earnings,” publishing April 25.