Snap to Close AR Enterprise Service Division
Snap is shutting down its AR Enterprise Service (ARES) division, which provided augmented reality (AR) expertise to enterprise customers. ARES included a Shopping Suite for brands to access AR try-on features and fit recommendation technology, as well as an enterprise manager for hosting and managing digital assets. This decision was driven by the emergence of competing AI tools that affected Snap’s competitive advantage and the need to invest in web tools rather than mobile. The closure will result in 170 job cuts, although some employees may be reassigned to other roles at Snap.
Impact on Snap’s Competitive Advantage
The rapid development of generative AI has made it easier for companies to create their own customer try-on experiences, making it harder for Snap to differentiate its offering. Due to this and the significant investment required to build up ARES, Snap decided to shut down the division and focus on other areas within the company.
Investing in Web Tools
Snap CEO Evan Spiegel highlighted the need to invest more heavily in web tools, describing them as “technically complex and less engaging for our customers”. By shifting focus from mobile to web technologies, Snap aims to align with the changing landscape and meet evolving customer preferences.
Continued Engagement with AR Experiences
Despite the closure of ARES, Snap reported that 250 million people still engage with its AR experiences every day. Snap remains committed to exploring new avenues within the world of augmented reality, while also maintaining its AR offerings and expanding its user base.
Potential Opportunities for Employees
While the closure of ARES results in job loss for 170 employees, Snap mentioned the possibility of reassigning some individuals to other roles within the company. Support for CameraKit, Sponsored AR advertising, and other areas may provide new opportunities for affected employees.
Revenue Decline and User Growth
Snap has experienced a decline in revenue recently. However, the company’s daily active users have grown by 14% year-over-year, reaching 397 million in the second quarter. Additionally, Snapchat+ achieved over 5 million paid subscribers. Despite the challenges, Snap remains optimistic about its future growth potential.
A Message from Snap CEO Evan Spiegel
Snap CEO Evan Spiegel expressed gratitude for the efforts of the AR Enterprise team and acknowledged the difficulties associated with building and winding down a business venture. He highlighted the importance of taking risks and trying new things, even if they do not always succeed. Spiegel emphasized that leadership in augmented reality requires experimentation and innovation.