Analysis of Standards and Networks Value of Snapchat

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1.Technology’s Stand-alone Value

Snapchat is a social media that allows users to share videos up to 10 seconds to each other, sometimes with transforming filters.Storiessent on Snapchat disappears after 24 hours and conversation disappears after being read.

It creates a new mode of sharing through social media among friends----sharing original videos instead of words or pictures. Watching the video stories posted by friends feels like watching TV starring people you know.

However, the user-interface of swiping left and right, up and down with no instructions is reported to be confusing to all the people over 25.It can only claimed ease of use towards the teens under 20.

2.Network Externality Value

1)The size of the technology’s installed base

Everyone who has Snapchat installed in his smart phone can be viewed as a component of the technology’s installed base. The daily active users of Snapchat have come to the number of 158 million in the 4thquarter of 2016, with more than 10 billions videos viewed by users everyday.From the above data we may assume that the size of the technology’s installed base must be really huge. However, remember what I mentioned in the first paragraph.Most of the loyal users are teens under 20.So the base is huge but narrow.

2)The availability of complementary goods

Complementary goods for Snapchat are mainly the original videos generated by users and media brands.This is still one user-generated-content platform, if there’s no content there’s no users. Two problems derive from here.

①Group effect plays an important role here.If a user is in a group that doesn’t share videos a lot, he may lose the interest in checking on all the videos posted on stories like watching TV.Matthew effect also applies here.

②According to the article, even loyalists could age out of the app as they reach a point when social display and fear of missing out—two key drivers of Snapchat engagement—are no longer motivating forces.On the other hand, young-age users may also turn to hip new apps.So users are fading from the two ends of its consumer group.The platform may be dying because ofless and less complementary goods----which means videos here.