Snap’s downward spiral continues as the company reportedly set to lay off around 20% of its workforce in an effort to drastically cut costs amid worsening market conditions. As The Verge reports, Snap’s planning to give the boot to more than 1200 full-time roles as part of a major restructuring aimed at getting its business back on track.
According to The Verge:
“The layoffs, which Snap has been planning for the past several weeks, will begin on Wednesday and hit some departments harder than others. For example, the team working on ways for developers to build mini-apps and games inside Snapchat will be severely impacted. Zenly, the social mapping app Snap bought in 2017 and has since run separately, will also see deep cuts.”
A Hard Choice To Make
What’s even more concerning for the company’s longer-term prospects, Snap will also be looking to cut staff from its hardware division, which is currently focused on AR-enabled Spectacles. Snap also recently announced that it will cease production of its Pixie selfie drone, which it launched just four months ago as a new way to capture content.
AR in particular is a key focus for Snap’s future development, with the platform continually leading the way on the latest AR innovations, despite competing against far bigger companies in Apple and Meta on the same. If Snap’s forced to take a back seat with its AR Spectacles, that could be a major blow for the company’s plans, which will eventually see its competitors take over the space, forcing Snap to the outer, limiting its growth potential.
At the same time, Snap has to do something. Snap shares are down 80% this year, due to various factors, including the Ukraine conflict, which has heavily impacted European ad spend, along with rising global interest rates, along with Apple’s iOS privacy changes, which have impacted ad targeting capacity in the app. That, in turn, has reduced ad effectiveness, and thus, advertiser interest, though Snap has been working to reassure ad partners that it’s developing solutions. It just needs time.
This advice comes from Snap Chief Business Officer Jeremi Gorman during the company’s Q1 earnings call in April of last year. Now, Gorman is among those that will be departing Snap as a result of this latest shift. Snapchat already gave a ‘prelude’ to their downfall earlier this year, so this news of massive job cuts really isn’t a surprise, but the scale is significant.
The Wrap
How will cutting 20% of its headcount impact Snapchat’s development? Would it be enough to change the course of the app for years to come? Nobody knows how long this economic downturn will last, nor the length needed for Snap to reimagine its ad targeting system, but as it stands, both seem like a thought in the distance. Then again, The Verge also notes that Snap had significantly increased its staffing numbers over the last two years, which does sort of balance this current shift out. I guess we’ll all soon find out.
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