Snap Launches Creator Subscriptions to Diversify Amid Ad Stagnation

What happened

Snap is introducing a creator subscription feature that lets creators earn recurring income directly from fans, aiming to diversify revenue beyond its ad-dependent model. This move comes as user growth moderates and North America ad revenue remains weak, with large-brand solutions growing just 1% YoY in Q3 2025. The initiative targets building more predictable revenue streams, aligning with Snap's broader push into subscriptions, where 'other revenue' grew 54% YoY last quarter. However, success hinges on overcoming fierce competition from platforms like TikTok and Meta, scaling creator adoption, and ensuring it doesn't dilute focus from fixing core ad pricing pressures. While it reinforces the diversification thesis, it doesn't immediately address Snap's profitability challenges or the need for durable double-digit revenue growth.

Implication

The creator subscription launch could boost Snap's 'other revenue' segment, which already shows strong growth, potentially improving revenue predictability and reducing reliance on volatile ad cycles. It may help retain top creators and increase user engagement, indirectly supporting ad inventory and monetization. However, significant investment in creator incentives and platform tools could strain costs, offsetting near-term profitability gains. If adoption lags or fails to scale, it risks being a distraction without materially offsetting ad revenue stagnation, especially with North America large-brand ads barely growing. Investors should watch for early KPIs on subscriber uptake and ARPU in upcoming quarters to assess if this move can transform the revenue mix beyond incremental gains.

Thesis delta

The thesis remains largely unchanged, as Snap is still in a 'WAIT' phase pending evidence of sustained double-digit revenue growth or North America stabilization. This announcement reinforces the existing subscription diversification strategy but does not alter the core challenges of ad pricing pressure and profitability. It adds a new variable to monitor but doesn't shift the risk-reward balance, keeping the focus on execution and upcoming metrics like Perplexity integration and ad recovery.