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Instagram's TikTok Rival Is Gaining Momentum: Report

A survey indicates many U.S. Instagram users have begun using Instagram's Reels video service, and plan on continuing to do so.
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Though initial reviews for Instagram Reels were very mixed, a new survey suggests the TikTok rival is gaining traction.

In a research note released Monday morning, Jefferies analyst Brent Thill reports that a survey of 819 U.S. Instagram users aged 13 and older found that 32% of respondents had used Reels since the service launched in the U.S. on Aug. 5. And among those users, 49% said they use Reels, which lets users share videos that last up to 15 seconds and feature music or audio soundtracks, daily, with 24.2% saying they use it more than once per day.

In addition, 83% of these respondents said that they’re either “likely” or “very likely” to use Reels in the future. 55.3% said that they’re “primarily” engaging with Reels via Instagram’s Explore tab, and 44.7% said they’re doing so via Instagram’s main feed.

There are a couple of things to keep in mind while digesting these survey numbers:

  1. Jefferies’ data doesn’t indicate how many Reels users are creating Reels videos, as opposed to simply watching them.
  2. Given that Instagram has been heavily promoting Reels through its Explore tab, and that many corporate, celebrity and influencer accounts have begun sharing Reels videos via feed posts and Instagram Stories, it’s hard for a daily Instagram user not to at least occasionally engage with Reels.

Also: Of the 88% of Reels users who offered a positive view of the service, close to half said that they “still prefer using other video platforms.”

Nonetheless, Thill’s note does suggest that there’s a lot of Reels viewing activity going on. Among other things, it pointed out that a Reels video shared by singer Selena Gomez had generated 61.7 million views -- far more than the 17.2 million views generated by Gomez’s most popular video for Instagram’s IGTV video service, which launched back in 2018.

“We would argue that there are many examples in which Reels posts are earning 5-10x the views of what a typical video post for that same account would receive on Instagram,” writes Thill, who maintains a Buy rating on Instagram parent Facebook  (FB) - Get Free Report. “This would seem to suggest that Reels posts are providing incremental engagement to users' profiles.”

Results from a Jefferies survey of Instagram users. Source: Jefferies.

Results from a Jefferies survey of Instagram users. Source: Jefferies.

With Reels’ short-form videos lending themselves well to sponsored content, Thill thinks Reels, which has now launched in 50 countries, could provide a $2.5 billion-plus annual boost to Facebook’s 2022 revenue, while lifting its EPS by more than 2%. He adds that the launch of Reels reminds him of the highly successful 2016 launch of Instagram Stories (also seen as a clone of a popular rival service), and that checks suggest advertisers will adopt Reels as soon as they’re able to.

Much of the initial commentary about Reels from the tech press has been less positive. In a widely-shared Aug. 12 article, The New York Times’ Brian X. Chen and Taylor Lorenz eviscerated Reels. Lorenz called the service “confusing, frustrating and impossible to navigate,” while calling attention to how much more difficult she found it to create a quality video on Reels compared with TikTok, which uses machine learning to automatically pick out highlights from uploaded videos and sync them to the music/audio a user has selected.

Reels’ early momentum comes as TikTok’s future ownership remains in limbo, amid the Trump Administration’s attempts to get Chinese parent company ByteDance to sell or spin off the platform. Microsoft  (MSFT) - Get Free Report and (reportedly) Oracle  (ORCL) - Get Free Report have held talks to buy TikTok’s operations in the U.S., Canada, Australia and New Zealand, with Microsoft also reportedly open to buying the whole of TikTok.

Over the weekend, TikTok, which now has over 100 million U.S. users, announced that it’s suing the Trump Administration in a U.S. federal court, arguing that Trump’s signing of an Aug. 6 order that requires U.S. companies to cease transacting with TikTok and ByteDance within 45 days deprives it of due process.

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