Facebook's (NASDAQ:FB) fast-growing photo and video sharing app, Instagram, just bought Luma, a video capture and sharing app. This acquisition, together with a major update in early August, provide deeper insight into Facebook's direction for Instagram. Facebook investors, take note: Instagram looks ripe for ad dollars.
Differentiation that supports monetization
Instagram is aiming for a different niche than Vine. It offers users far more flexibility in video creation. The most significant difference is Instagram's 15 seconds of video versus 6 seconds for Vine. Then there are the filters and cover frame -- both features Instagram boasts and Vine doesn't.
With the acquisition of Luma, Instagram's plan to empower users with flexibility is clearer than ever. Luma's major assets were its video stabilization technology (which is rumored to be the technology already behind Instagram's video stabilization) and its simple video-editing tools.
Both of these assets further differentiate Instagram from Vine's faster and simpler approach that supports more impromptu, shorter clips.
Coincidentally (or not), a very important group should appreciate flexibility: businesses and advertisers. Perhaps the company's differentiation has something to do with building a platform that supports this group.
Instagram's latest major update also supports this notion. The most notable change to the update was the new ability for users to import video as opposed to being restricted to videos captured within the app. This means users can upload fully edited, 15-second videos.
This is big news. Want to see a glimpse of the potential this gives advertisers and businesses? Check out Instagram's first-ever movie trailer.
Instagram is a powerful asset
Sure, Instagram currently generates zero revenue for Facebook. But that doesn't mean the app isn't an asset. The company has explicitly stated that it plans to eventually monetize the service -- probably through advertising. 130 million monthly active users and, now with Instagram video, hours of new footage every minute -- if monetized, Instagram could meaningfully contribute to the bottom line.
And now as we watch Instagram's identity evolve, Facebook investors can rest assured that Instagram's video-sharing flexibility is conducive to the company's goal to monetize the platform.