Reddit Snaps Up Dubsmash to Expand in Fast-Growing Video App Market

San Francisco-based Reddit is best known for its message boards on millions of topics and its “ask me anything” digital town halls with celebrities, politicians and various experts. Earlier this month, the social-media company disclosed for the first time that it had an average of 52 million daily active users as of October, up 44% from a year earlier. 

User-created video is behind the success of the hit app TikTok, which has inspired Facebook Inc.’s Instagram and Snap Inc.’s Snapchat to introduce similar services. Also popular are platforms that let users broadcast live video such as Amazon.com Inc.’s Twitch and Alphabet Inc.’s YouTube.

“The transition to video will be bigger than the transition to mobile,” said Reddit Chief Executive and co-founder Steve Huffman. “We’re still only at the beginning.”

Reddit already lets users upload and live-stream video but has limited editing features. By acquiring Dubsmash, Mr. Huffman said Reddit will gain more sophisticated user-created video much faster than if it tried to develop the same on its own.

“The cost of video keeps going down, the technology for recording and encoding it keeps getting better and better, and on the advertising side, video ads are more effective,” he said. “They’re more visceral and engaging.”

Dubsmash, founded in 2015, was last valued at $47.5 million in 2016 and has raised roughly $20 million as of 2019, according to PitchBook, a provider of private market data. Dubsmash’s app has been downloaded nearly 197 million times, app-analytics firm Sensor Tower Inc. estimates.

Dubsmash says about 30% of its users log in daily to create video. The company, which doesn’t generate revenue but has grown a following through word-of-mouth, says it is dedicated to giving a spotlight to underrepresented creators and communities not seen on mainstream social networks.

“Our focus is showing a different side of the internet,” said Dubsmash’s co-founder and president, Suchit Dash. He declined to provide a number for Dubsmash’s total users but said 70% are female, and that about a quarter of all Black teens in the U.S. use the app.

Under the terms of the deal, Dubsmash will remain an independent app for Apple Inc. and Android devices, and its video-creation tools will be incorporated into the mobile version of Reddit’s app. New York-based Dubsmash’s 12 employees will join Reddit’s workforce of around 700 people.

Reddit’s deal for Dubsmash was reported earlier by tech publication the Information.

Reddit was valued at $3 billion after its last funding round in February 2019, according to PitchBook, and has raised more than $550 million since its inception. Investors include China’s Tencent Holdings Ltd., venture-capital firm Andreessen Horowitz and rapper Calvin Broadus, better known as Snoop Dogg.

Write to Sarah E. Needleman at [email protected]