Is This Facebook's Biggest Augmented Reality Threat?

By Markets Fool.com


Image source: Getty Images.

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At Facebook's F8 conference in April, CEO Mark Zuckerberg touched on the company's interest in augmented reality, noting that 10 years from now, we may all have glasses that project both virtual and augmented reality (AR) displays with cheap apps that allow us to display anything we want. And, of course, we'll be able to share the content with friends.

"[This] is the vision, and this is what we're trying to get to over the next 10 years," Zuckerberg said.

Facebook's vision for augmented reality (AR) is still years away, but a recent investor note put out by SunTrust Robinson Humphrey's Robert Peck (republished on Barron's) suggests that Facebook could face some stiff AR competition from rising social media company Snapchat.

Peck says Snapchat's popularity among younger users and its current use of AR could eventually threaten -- to some extent -- Facebook's plans.

Let's take a look at a few of Peck's points.

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Snapchat's rise

Here's what Peck said in part of the note: "We think that Snapchat is evolving beyond just 'another social media platform' and could be headed to be the first 'social augmented reality platform' (SARP)."

Why? Peck believes the images people are seeing on Facebook and Instagram are too perfect and are starting to all blur together. And he thinks that means Snapchat's photos and videos could become more socially shareable than some on Facebook or Instagram.

"The fun and unique nature of the content therefore becomes more shareable, vs some of the more repetitive & common photos on other platforms," he wrote.

However, he thinks the real socially shareable factor comes from live, augmented reality videos. It won't just be augmented reality selfies people will share, but rather objects that can be interacted with through a Snapchat augmented reality filter, Peck said.

This is a bit of speculation, of course, because there's currently no data to show that Snapchat's AR would be more shareable then a Facebook Live video. Still, Peck points to Snapchat'sascension of daily active users (DAU) as a growing augmented reality threat.

The company already has 150 million DAUs, surpassing Twitter's 136 million. It falls far short of Facebook's 1 billion DAUs, of course, but Snapchat is growing fast among younger social media users in the U.S.

Snapchat's engagement is higher than both Facebook and Instagram's among 13- to 24-year-olds, with 73% using it daily, compared to 70% for Facebook and 65% for Instagram. Peck also notes that monthly and daily active users continue to climb on Snapchat, and that augmented reality will drive further growth because of its uniqueness.

Facebook will be fine

While Peck could be right about augmented reality being more socially sharable than photos or traditional videos, that doesn't mean Facebook will miss the AR boat. The company has already proved its platform can pivot toward rising trends -- and succeed.Facebook's recentfocus on video is a prime example of this.

Facebook now has about 8 billion video views per day and has boosted the length of time users watch videos by three times, after implementing its Facebook Live videos. As a result, the company says organic reach is 135% higher with videos than with the average photo. Additionally, a 2015 study by Advertiser Perceptions showed that Facebook was second, only behind Google and YouTube, as the platform that marketers want to spend money on for video advertising.

If Snapchat continues to grow its user base and AR becomes even more important to younger social media users, it could possibly force Facebook to speed up its AR plans.

Facebook is already planning for an AR future and could, if it really wanted to, add new AR features into its Messenger app. There's nothing stopping Facebook from doing so, or simply snatching up Snapchat if the company proved to be a real threat.

So no, I don't think Snapchat is a true AR threat for Facebook. If anything, Snapchat may just be an example for helping Facebook understand what younger users are looking for from a future Messenger update.

The article Is This Facebook's Biggest Augmented Reality Threat? originally appeared on Fool.com.

Chris Neiger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Facebook and Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.