Billion-dollar battle for photo filters

The world's biggest social networks are locked in a serious battle over silly filters. Photo / Bloomberg

The world's biggest social networks are locked in a serious, billion-dollar battle over one of the world's silliest innovations: puppy-eared, rainbow-spewing photo filters.

Snapchat is spending up big to keep its lead in the online photo market, while Facebook and Instagram shamelessly copy many of its features, and Apple and Samsung appear poised to enter the market.

But while it looks like a flippant fight, analysts say where you choose to share silly snaps could help decide which tech giant wins the internet popularity contest.

Telsyte managing director Foad Fadaghi said the battle was most important for $US33 billion network Snapchat, which relied upon photo filters to keep its young audience keen.
Facebook could afford to "experiment" with photos to attract more users, he said, while Instagram needed them to keep Snapchat at bay.

"The challenge for any of these services is maintaining users once the initial novelty has worn off, however," Mr Fadaghi said.

"It will be challenging for businesses which rely upon photo filters for their business model."

The photo filters are a basic form of augmented reality that is programmed to recognise faces and add pictures, such as puppy dog ears, or recognise locations and add city names, temperatures, or event details to photos.

Snapchat recently splashed out $US7.7 million for location-based filter technology - the highest sum for an Israeli patent - to keep them in the game.

But Instagram notched up an even larger win, revealing it boasts more than 700 million active accounts, including 200 million daily users of its Snapchat-like Stories feature with photos that disappear after 24 hours.

Kylie Jenner likes the Snapchat dog filter.

By comparison, Snapchat boasts a total of 165 million daily active users.

The milestone prompted Mizuho Securities analysts Neil Doshi and San Phan to compare Snapchat to Yahoo rather than a big tech firm like Google.

"At the heart of Snapchat is a messaging app," the analysts wrote, "and the company faces very stiff competition in that segment based on our assessment."

Plus, two of the world's biggest tech firms appear set to join the battle.

Samsung introduced a host of photo filters into the camera of its new Galaxy S8 smartphone, and Apple introduced an app called Clips that adds filters, stickers, and captions to video in real-time.

Apple analyst Gene Munster said the company wasn't serious about taking on Instagram or Snapchat yet, but it wanted to ensure it was investing in the popular technology.

"If you really dig into this Clips, it's more about them working with filters and augmented reality," he says.

"Longer term, the significance of augmented reality for Apple is having a place at the table in the future of computing."