Instagram's TikTok-like Reels Increase User Time, According to Meta's Q1 2023 Report

Meta, the parent company of Instagram, shared its Q1 2023 quarterly earnings on Wednesday, revealing that the introduction of Reels on the platform has increased user time by more than 24%, reported first by TechCrunch.

Thanks to AI

Mark Zuckerberg, the founder and CEO of Meta, credited the AI-powered content recommendations for the growth in user engagement, similar to how TikTok has built its brand.

Susan Li, the CFO of Meta, joined Zuckerberg to answer analysts' questions regarding the Q1 results. When asked about the impact of Reels on the platform, Li noted that it's evident people enjoy short-form videos on the platform.

Additionally, Instagram has seen a significant increase in sharing around Reels in recent months, with resharing doubling over the last six months.

Although Reels and AI recommendations are driving more engagement on Instagram, it has not yet translated into more revenue for the company. Li acknowledged that Reels are taking some revenue away from Stories and feed-based posts, as they are accounting for some of the time users would have spent engaging with that content.

Li clarified that although the trend is incremental, indicating an overall increase in user time, Reels is expected to be revenue-neutral by the end of this year or early 2024 and eventually become a significant contributor to monetization.

However, she acknowledged that Reels' structural differences from existing Instagram content types would require product work to figure out proper monetization.

While they do not have a clear plan to achieve Reels' monetization parity with feed or Stories per time, they are confident it will eventually become a significant monetization source.

TikTok's Impact on Meta

TikTok's explosive growth in recent years has shown that short-form video content is a popular and engaging format for social media users.

As TikTok continued to gain traction, Facebook and Instagram started to feel the pressure to create their own short-form video features to compete.

Hence, Meta created reels, while YouTube also introduced Shorts to its platform.

The popularity of TikTok has also changed user behavior, with many people spending more time watching short-form videos instead of scrolling through traditional news feeds. By introducing Reels, Meta hoped to capture some of that user attention and keep people on their platforms for longer periods.

Reels are similar in concept to TikTok, with users able to create short videos with a variety of editing tools, music, and effects.

By providing similar features, Meta wanted to appeal to TikTok users who might be looking for an alternative or additional platform to share their content.

While it's clear that Reels and Shorts have increased user engagement on Instagram and Facebook, it remains to be seen whether they will be able to match the popularity of TikTok.

TikTok has a massive and dedicated user base, and its algorithmic recommendations are often praised for their accuracy and effectiveness. Additionally, TikTok has already developed a monetization strategy that Reels and Shorts are still working to implement.