Snapchat’s parent company Snap Inc. SNAP just landed a massive content deal with NBCUniversal for the 2018 Winter Olympics. But what does it mean for the struggling social media app?
The Wall Street Journal first reported that the deal is worth an estimated $50 million to $75 million based on advertising commitments in the first quarter of 2018. As part of the deal, NBC, owned by Comcast Corp. CMCSA, will sell for the first time Olympic-based Snapchat geofilters and “lenses” to advertisers.
Snap’s stock went up 1.53% to $22.55 per share on Wednesday, before falling slighting in after-hours trading. Snap is currently a Zacks Rank #3 (HOLD).
The new NBC and Snap deal is the second recent and major partnership between the two companies. NBC joined forces with Snapchat to help enhance and expand its Rio 2016 coverage in August. NBC also invested $500 million in Snap’s March IPO.
But does NBC’s second Snapchat Olympic deal signal something bigger for the disappearing messaging company?
Real Player Going Forward?
Snapchat owns the audience that NBC desperately wants to profit from, the coveted 35 and under demographic. Snapchat makes almost all of its money from advertising, so any deal that could land the company $75 million in just over two weeks isn’t a bad thing.
Comcast paid $4.38 billion for the U.S. media rights to the four Olympics between 2014 and 2020. NBC then doubled-down and paid $7.65 billion for the rights to broadcast the Olympics through 2032, so the money Snap could see in 2018 is relative peanuts in NBC’s grand scheme. Still, it is a solid step forward for the relatively new social media company.
NBC lost Olympic viewers for the first time since 2000 this past summer in Rio. NBC drew an average of 25.4 million viewers on its prime time Brazilian coverage. London 2012 drew 31.1 million prime time viewers, according to an NBC release.
NBC is fighting to gain as many eyes as possible for its 2018 coverage, and Snapchat helps the cause. According to NBC, nearly 35 million people in the U.S. viewed NBC’s Rio coverage on Snapchat.
Pyeongchang, South Korea is scheduled to host the 2018 Winter Olympics Games. The Winter Olympics are always less popular overall than its summer counterpart. Still, the Olympics are arguably the biggest and most important television rights deal NBC owns. The prestigious NBC Olympic exposure can’t hurt Snapchat.
Snapchat will share NBC Olympic content in an NBC Snapchat live story, which will also feature user-generated content live from South Korea. Similar to its Rio deal, BuzzFeed will help NBC produce content that will be posted throughout the games in Snapchat’s Discover feature.
NBC will sell ad slots that are spaced throughout its Snapchat Olympic coverage. They will also be able to sell branded geofilters and lenses.
In Snapchat’s fight against Facebook Inc. FB and Alphabet Inc.s’ Google GOOGL for online and mobile advertising revenue, every dollar counts. Snapchat’s second massive NBC Olympic deal certainly helps the company not only gain more always-needed ad revenue, but it helps further legitimize the social media company with such high faith from a legacy media powerhouse.
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