$100M Kids Social Network Wins NBA Backing, Boxing Draws 2.4M Twitch Viewers, and Snapchat+ Arrives
What We’re Reading
3 articles + RockWater analysis to make you a better investor and operator.
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NBA Invests in Celebrity-Backed Kids’ Social Network Zigazoo
Bloomberg, 6.28.2022
The RockWater Take by Alex Zirin
In their latest bit of venture investing, the NBA has taken a position in kids-focused social network Zigazoo. The round values the network around $100 million, and includes Liberty City Ventures, Dapper Labs, Animoca Brands, and more. Existing investors include the D’Amelio sisters, Jimmy, Kimmel, Serena Williams and MaC Venture Capital.
Zigazoo is a TikTok-like video-sharing app for children that orchestrates challenges and activities for kids in short clips, while responses can be shared with friends in the social network. Zigazoo will use the fresh capital to develop more creator tools, create a marketplace for digital goods and expand into “emerging tech sectors” like augmented reality and the metaverse. In April, the social network started selling its first NFTs with Moonbug.
Clearly, the NBA is smartly focused on developing deeper relationships with their fans, and is looking to move their various business efforts further upstream (earlier this month, it put money into Nextiles, a smart-fabric technology business).
Zigazoo’s kid-focused structure frees them from the complicated profit incentives that hinder the existing social giants. Reduced reliance on viral misinformation, identity-verified signup, and strict content moderation leads to a much safer environment for kids to be social on the internet.
Although many alternative social networks have burned hot and fast over the last decade, the excitement around Zigazoo seems to be sustained. For the NBA and Zigazoo’s other strategic investors, Zigazoo provides a responsible way to deepen relationships with their younger fans.
Amidst the current pullback in VC growth funding, it’s promising to see a deal like this make it over the line.
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A Boxing Stream Just Set Twitch’s New Concurrent Viewership Record
TubeFilter, 6.27.2022
- Barcelona-based creator Ibai broke Twitch’s previous concurrent viewership record, 2.4 million, during the June 25 livestream of his boxing event La Velada Del Año II (“The Night of the Year II”) with 3.3 million concurrent viewers.
- On top of setting Twitch’s new concurrent viewership record for a single stream / creator, the boxing event also helped set a new record for total concurrent viewership across the site. The outlet reports Twitch hit 6.6 million concurrent viewers during La Velada Del Año II, and that the boxing event accounted for more than 50% of that traffic.
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The RockWater Take by Andrew Cohen
Another case study for the power of live sports. It’s long been said that live sports are the glue holding the pay-TV bundle together. But now it’s clear that the value of these properties will still apply in “post-cable” environments.
And for upstart leagues, it proves the value of social streaming as a viable market entry. Forgoing the upfront dollars from legacy networks in favor of the potential for uncapped global reach and engagement was the playbook that enabled Esports to scale, and it could work for other nascent leagues as well.
It also makes me think about the potential that live sports properties and platforms have as a vehicle for live commerce. The biggest issue facing many of the top platforms attempting to enter the space is cultivating user consumption / engagement. They’re investing in developing new creators and content formats to do so.
But sporting events already have these live-centric fandoms built in.
They’re already leveraging this increasingly unique consumption behavior to drive outsized ad revenues, but what if they also integrated commerce into the viewing experience? With exclusive time-sensitive product drops that are shoppable directly through the broadcast. Or discounted team merch and / or products from advertising partners? Given the scope of the reach and passion that live sports generates, how much incremental revenue could this create for platforms and IP owners?
The value of live sports is only just beginning to be fully harnessed…
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Snapchat Adds Paid Subscription with More Features for Power Users
The Verge, 6.29.2022
The RockWater Take by Michael Booth
Snap Inc. is launching Snapchat Plus, a SAAS product for power users priced at $4 a month.
This is a gamechanger.
It marks Snap’s first foray into non-advertising revenue.
Initially, Snapchat Plus will merely be a cosmetic upgrade. Launch features include:
🔁 Changing the style of the app’s icon
👀 Seeing who rewatched a story
📌 Pinning one of your friends to the top of your chat history as a “BFF”
THE BIGGER PICTURE:
It is a treacherous battle to compete with Meta and Google for ad $dollars.
Snap creates an incredible amount of value through its AR filters, which remain unmonetized.
Over 250 million Snapchat users engage with their AR filters daily (credit Dylan Harari).
Filters originate from Snapchat, then go viral on all the other social platforms, like Instagram and TikTok.
Remember the crying filter? Or the dog ears filter? Or the shook face filter?…
I’d like to see Snap start giving early filter access to its paid subscription customers
Potentially a Catch 22, because paywalling could curb a filter’s virality, but I doubt it.
A $4 in-app-purchase is peanuts, compared to FOMO for being left out of the latest trend.
And there therein lies the genius of saas revenue.
$4 feels inconsequential, so once someone impulsively signs up, user churn will be low.
Most customers will probably forget about the recurrent charge altogether.
But that’s $50 per year to Snap for each user that signs up.
Very good ARPU for a social media platform.
For context, Snap’s Q4’21 ARPU was $4.
This would be BIG for Snap.
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