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This Is Instagram's Opportunity to Make IGTV a Success

By Adam Levy – Apr 20, 2020 at 11:04AM

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The long-form video platform has struggled to build a network of creators and viewers.

Instagram introduced IGTV in the middle of 2018, and so far it's had a bit of trouble gaining an audience. But the company is pulling out all the stops amid the coronavirus pandemic as user-generated content has flourished.

If the Facebook (META 2.16%) subsidiary can make IGTV more of a habit for its billion-plus users while it's seeing soaring engagement in other parts of its app, it could see a nice boost to its revenue.

A man holding a microphone in front of a screen displaying the IGTV logo.

Former Instagram CEO Kevin Systrom introducing IGTV. Image source: Instagram.

Driving both sides of the network

IGTV is most comparable to YouTube in terms of functionality. But YouTube benefits from being one of the first platforms to enable anyone to upload and share videos. Over the last 15-plus years, it's built a massive network of creators and viewers. In order for anyone to compete with the Alphabet (GOOG 3.28%) (GOOGL 3.13%) subsidiary, they need to build both sides of the network at the same time.

To that end, Instagram is making it extremely easy for creators to share videos on IGTV by taking videos they're already creating -- via Instagram Live -- and sharing them once they're done filming. Instagram says it's seen a 70% increase in live streaming amid the coronavirus pandemic, and now users can upload those videos to IGTV with the push of a button.

Meanwhile, it's drawing in audiences by using a feature that's already seeing heavy traffic, Instagram Stories, and pushing IGTV videos into it. The company updated its main app earlier this month to enable creators to share IGTV videos to their stories, and users can click through to watch the full video.

Given the ongoing environment in which consumers are hungry for content and creators are searching for an outlet, Instagram may be able to finally draw both an audience and a broad group of creators to IGTV.

Facebook's proven capable of building multiple networks in the past, and it's adept at leveraging existing user behaviors within its apps and capitalizing on opportunities when it sees them. IGTV is its next big opportunity.

How big is the opportunity?

Earlier this year, Alphabet revealed that it generated $15 billion in gross revenue from YouTube last year. While that's less than analysts had expected, it's still a nice chunk of cash. YouTube splits that revenue with creators, who take home the majority of its ad sales.

YouTube is significantly larger than Instagram, boasting over 2 billion users -- twice as many as Instagram's last public update. And it's larger still than IGTV, which Instagram has never publicly said how many people use.

But if Instagram can slowly migrate users and creators over to IGTV it could eventually be producing billions in net revenue from the platform within just a few years. The tech company's made similarly rapid progress in the past. It launched Stories in 2016, and it's quickly turned into a multi-billion dollar source of revenue and the key growth driver in the near term for the company. As Facebook works to maximize revenue from Stories, it needs to find a new area to continue pushing its revenue growth as it saturates ad impressions in its already popular products.

The next few months could be crucial for Facebook and Instagram, as it's presented with an opportunity to grow a platform and format it's been struggling with for several years now.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Adam Levy owns shares of Alphabet (C shares) and Facebook. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Facebook. The Motley Fool has a disclosure policy.

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