Snapchat (now known as their parent company name, Snap Inc.) has a history of disrupting media, social behavior, and cultural norms. Snapchat, the social platform first known for disappearing picture messaging, quickly became the mobile app of choice for teens and Millennials (Mashable). So much so that one study even noted that many Millennials would rather delete their main calling app over losing Snapchat (Business Insider).
With over 150M current users, Snapchat has been the innovator in the arena of social apps with my many other industry stalwarts lagging behind in feature development directly copying Snapchat’s featured (e.g. Instagram Stories vs. Snapchat Stories). Snap Inc.’s recent release has evolved past the mobile app screen into tech products. They debuted their first hardware product “Spectacles” in November 2016 shortly after it filed privately from its IPO.
As its (predicted) March 2017 IPO date approaches, here’s how Snapchat’s user growth, unit sales, market penetration, and adoption rates will lead Spectacles to become a $5B year product by 2020.
See our infographic below for projections on how Snapchat Spectacles will gross over $5B in revenue by 2020. For a detailed explanation of our projection and forecast methodology based on Snapchat’s user growth, adoption rates of popular tech hardware products, and more, see our explainer paragraphs following the infographic:
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At present Snapchat has a user base of 150 million. By extrapolating eMarketer’s Snapchat U.S. user forecast growth across a global scale (we assumed a similar rate of growth as outlined in eMarketer and applied it to Snapchat’s current global user base), we arrived at 280 million monthly active users by 2020.
Next, we looked to various Year 1 to Year 4 adoption rates for popular tech hardware products released from brands with an established user base (similar to how Snap Inc. first established its user base with Snapchat and then rolled out Spectacles, a new and different way for its most fervent users to experience Snapchat). Additionally, we also considered the ratio of fitness tracker users compared to the number of people who exercise frequently:
To project the revenue for Snapchat Spectacles in 2020, we examined both the YoY growth rate of the iPhone after release (Scenario 1) and the adoption rates of the aforementioned products.
Assuming a 1% starting adoption rate in 2017, Spectacles would achieve a $1.42B in gross revenue at 11M units sold (at $129) by 2020 if it follows a similar growth trajectory as the iPhone.
As the adoption rates achieved of the aforementioned tech products ranged from 3% to 18% (ranging from Year 1 to 4), we projected 3 additional Year 4 Snapchat Spectacle adoption rate scenarios at 5%, 10%, and 20%.