Snapchatmaker Snap is suspending its gaming business, Snap Games, amid financial turmoil. The social media company disclosed the decision in a recent regulatory filing, framing it as a necessary step in an incoming restructuring that will also see it lay off some 20% of its global workforce, which consisted of nearly 6,400 employees as of June 30.
The Snap Games program was announced at Snap Partner Summit in mid-2019 and is independent of the company’s partnerships with mainstream game publishers who occasionally create promotional filters andhost exclusive sales on Snapchat. According to Snap’s developer pages, over 300 million people played Snap Games to date, which equates to over 90% of the Snapchat user base. A high engagement rate relative to rivaling social media apps has long been Snapchat’s main selling point to advertisers, but monetizing it has proven challenging.
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In a last week’s filing with the US Securities and Exchange Commission, Snap outlined a plan to “substantially reduce or eliminate” all endeavors that aren’t direct contributors to its three post-restructuring priorities: user growth, revenue growth, and augmented reality. Apart from its gaming business, Snap Originals, Minis, and Pixy are also on the chopping block. So, no more flying cameras, no morechainsaw-wielding Ryan Reynolds. The company’s Voisey and Zenly apps will also be sunset as part of the restructuring.
At least a few more titles are likely to release under the Snap Games umbrella in the near future. The company’s gaming division has so far been consistent at introducing new games on a quarterly basis. The latest such creation,Ghost Phone, launched just last month, and Snap ostensibly had more near-finished projects in the pipeline before deciding to cut its games funding. Furthermore, this almost certainly won’t spell the end for Snapchat use among game publishers. In-app content like Ninja Theory’sofficial Snapchat filters forSenua’s Saga: Hellblade 2should hence continue getting made.
That said, Snapchat isn’t exactly the most popular marketing tool in the gaming space. Examples of promotional AR content such as theGhost of Tsushimaofficial Snapchat filterare few and far between. And overall, game publishers seem to be just as reluctant to spend their marketing budgets with Snap as advertisers in unrelated industries. Consequently, Snap is currently trading at just over $11, almost 40% down compared to its 2017 IPO price of $17.60.
Despite the official claim that more than one-third of Snap Games publishers made over $1 million from HTML5-powered Snapchat games, Snap itself seems to have little to show from its 40-month endeavor. So, regardless of whether the California-based company completely scraps or merely defunds Snap Games, it won’t be making significant waves in gaming anytime soon.
