Instagram debuted Reels -- its TikTok clone -- in 50 countries in August after testing the feature in select markets over the last few months. The quick move to launch following early tests in Brazil is a sign of confidence that Reels can meet a big challenge represented by the growing popularity of TikTok. The overarching goal with Reels seems to be filling in a gap in the Facebook (NASDAQ:FB) subsidiary's product for creators: Reels is a place where you can be discovered.
Ultimately, filling in that gap could reduce the attraction of TikTok for Instagram's existing user base looking to create an audience for themselves. And it could have a similar effect on TikTok as Instagram Stories had on Snap's Snapchat. It won't kill the rival product, but it could stunt its growth.
Igniting that spark
Earlier this year, Instagram CEO Adam Mosseri talked about what he can learn from TikTok in an interview with NBC News' Dylan Byers:
I think the things that are most interesting lessons for us to learn from them are, one, they are a place where people really feel like they have an opportunity to break [out] ... You can just sort of make it on TikTok ... And actually I think people break in Instagram but we're much better at growing people that have that spark.
That sentiment was echoed by Vishal Shah, head of product at Instagram, when describing the launch of Reels: "We have not historically been very good at helping new creators find an audience," he said.
Giving creators the opportunity to go from discovery to audience growth and cultivation all on the same platform is the goal for Instagram as the company combines Reels with its other products, Stories and the classic feed. That would lead to increased engagement from both creators and consumers, creating more advertising opportunities and lower engagement for its competitors.
Instagram is one of the few companies that can get content in front of a big audience quickly. The app counts over one billion users, a number Facebook hasn't updated in over two years. More than half of those users access the Explore tab (which houses the Reels product) on a monthly basis. By comparison, TikTok had around 800 million users before the app was banned in India (with about 200 million users). A large number of those users are also in China where Facebook doesn't compete.
An existing audience is key. When Facebook tried to launch a stand-alone TikTok competitor, it failed.
Another big advantage for Instagram
"The other thing that [TikTok's] really good at is a place just to go and be reliably entertained," Mosseri told Byers. But its default experience is an unconnected one. You open the app and TikTok's algorithm surfaces the most popular content on the platform. Over time, it can learn what you like, but the default experience isn't very personalized.
Instagram can use its existing data to surface more personalized content for users on Reels. That can lead to a higher user-retention rate, ultimately leading to a bigger audience for creators. That should feed a virtuous cycle for content on the platform, as more creators are attracted to bigger audience opportunities and the chance to "break."
Few competitors offer the same level of data as Instagram. Even Snap, which is working on its own TikTok-like features, has much lower level data on its users' interests and demographics. While Snap might be able to borrow creative ideas from TikTok for users to make new videos to share with friends, it won't become the place to be reliably entertained like the Chinese app.
Facebook CFO Dave Wehner said management plans to update investors on its progress with Reels in the future, but it was too early to share engagement data during a follow-up call with analysts after its second-quarter earnings release.
The ultimate measure of Reels success will be what kind of impact it has on TikTok's growth. And those numbers may be harder to come by as ByteDance, TikTok's parent company, doesn't provide regular updates on the user base. An acquisition by Microsoft, which is in active discussions with ByteDance, may offer investors more consistent updates, but that's no guarantee either. Microsoft doesn't provide regular updates on the size of LinkedIn's user base, for example.
When Instagram released Stories, it had a noticeable impact on Snapchat. That was the clearest sign of its early success with Stories, and a similar result for Reels and TikTok could be deemed a success. Facebook's decision to launch Reels globally just days after the FAANG stock's latest earnings report might not be coincidence. It'll have much longer to gather data to share with investors by its next update.