During a time when artificial intelligence is driving virtual and extended realities, Snap Inc. has decided to nix its Augmented Reality Enterprise Services unit after just six months. The company confirmed the move after an internal memo leaked to the press on Wednesday and then chose to publish the memo on its own blog.
Snap has been a longtime proponent and developer of AR, but the move looks like more of an acknowledgement of a tough business reality, rather than lack of faith in the technology itself.
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The memo, penned by chief executive officer Evan Spiegel, discussed how the generative AI era has ushered in new tools that allow practically anyone, from big to small platforms, to develop and deploy virtual try-ons. This “made it harder for us to differentiate our offering,” wrote Spiegel, unless it deepened its investment. That looks unfeasible right now, amid declining revenue.
Snap needs to stay focused on its advertising business, and if it’s going to channel funds somewhere, the emphasis needs to be less on mobile and more on web AR, which is a tougher technical challenge. That’s notable, considering Snapchat was a mobile-only app for more than a decade, from its launch in 2011 until last year, when it launched a web version. Given that, this part of the platform is still relatively young.
“I am deeply grateful for the hard work of our AR Enterprise team,” Spiegel wrote in the memo. “It is very difficult to create a new business, and incredibly painful to wind it down, but it is the willingness to take risks and try new things that moves the world forward through innovation and experimentation.”
ARES launched in March, arriving with tools such as Shopping Suite in tow. The company boasted features, such as virtual try-ons, a 3D viewer that could showcase products from different angles, fit recommendations and more. It also spotlighted ARES at its Partner Summit in April, alongside its debut of AR Mirrors for physical retail. The mirrors intrigued a number of brands — including Men’s Wearhouse and Nike, which tested the offering — while Shopping Suite introduced Live Garment Transfer, a streamlined way for brands to create AR visuals using 3D images in Lens Studio.
The shuttering of this business unit eliminates 170 roles, though at least some staffers will be reshuffled into other teams.
Although ARES is no more, that doesn’t mean Snap is backing off of augmented reality. That may be a wise move, as AR has been experiencing something of a renaissance amid the spatial computing boom, as accelerated by Apple’s Vision Pro headset announcement in June. The concept lays out a framework of computing that gives people a more natural way to interact with features as a seamless part of their environment.
In a follow-up with WWD on Thursday, Snap pointed out that 250 million people still use AR in the app daily, and it also plans to continue investing in the space in other ways. The re-organization will transition at least some ARES employees to other AR teams, including the core AR experiences and AR ads.
The company also reaffirmed its commitment to fashion, retail and beauty as ongoing priorities, and pledged to continue working with brands through its Sponsored AR offering, which includes AR shopping and the CameraKit platform for consumers.
“The courage and strength of our AR Enterprise team members embodies so much of what I love about Snap and I am so sorry that this venture did not work out as we had hoped,” Spiegel added. “Leading in augmented reality means that sometimes we will fail, and I am proud that our team dared to build this business even if we did not succeed.”
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