Snap, the parent company of Snapchat, has announced the closure of its AR Enterprise Service (ARES) division. The division, which aimed to provide augmented reality (AR) solutions to enterprise customers, was launched in March of this year. However, after less than a year of operation, Snap has decided to shutter the division due to emerging competition and the need to focus on web tools.
Key Takeaway
Snap has decided to close its AR Enterprise Service (ARES) division, citing increased competition from AI tools and the need to focus on web tools. The closure will affect 170 jobs, but the company still maintains a significant user base of 250 million individuals engaging with its AR experiences daily.
AR Enterprise Service (ARES): A Closer Look
The AR Enterprise Service (ARES) division offered various features to brands, including a Shopping Suite that allowed them to incorporate AR try-on features, a 3D viewer for showcasing products from different angles, and fit and sizing recommendation technology. The division also provided an enterprise manager where brands could host and manage their digital assets.
Internal Memo Confirms Closure
The closure was confirmed by Snap CEO Evan Spiegel in an internal memo. Spiegel pointed to the emergence of AI tools that have made it easier for companies to create similar AR experiences for their customers, diminishing Snap’s competitive advantage. He also noted the increased complexity and lower engagement of mobile-based AR technology compared to web tools.
According to the memo, building up the ARES division would require significant investment, which Snap deemed unsustainable. As a result, approximately 170 jobs will be affected by the closure. However, some employees may be reassigned to other roles within the company, particularly in support of Snap’s CameraKit and Sponsored AR advertising.
Despite the closure, Snap highlighted that it still has a substantial user base of 250 million individuals who engage with its AR experiences daily.
Challenges and Growth for Snap
The decision to close the ARES division comes at a time when Snap has been facing declining revenue. In Q1, the company experienced its first revenue decline since going public, and Q2 also saw a year-over-year drop in revenue. However, Snap has managed to grow its daily active users, which reached 397 million in the second quarter. Additionally, the company recently announced that it has surpassed 5 million paid subscribers for Snapchat+.
Spiegel expressed gratitude for the efforts of the AR Enterprise team and acknowledged the challenges involved in building a new business. He emphasized the importance of taking risks and trying new things, even if they do not always lead to success. Spiegel concluded by stating that leading in augmented reality means accepting the possibility of failure and commended the team for their courage and innovation.
