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Last week Instagram launched Reels, a new feature with striking similarity to TikTok. It focuses on full-screen short videos (max of 15-seconds) in vertical format set to viral audio clips. The feature sits within the Explore section of the app.
Many are comparing the Reels launch to Instagram’s Stories feature, which at the time was an imitation of Snapchat’s functionality. Stories became a huge success and sapped users from Snapchat. However that does not mean the same will happen with Reels and TikTok, as other Instagram features have flopped; IGTV is generally considered to be a dud.
While Instagram certainly created buzz around the Reels launch, media coverage has been varied:
- The Wall Street Journal described Facebook “taking inspiration from competitors.”
- Time noted that Instagram and TikTok are fighting for Creators’ loyalty
- Digiday pointed out the lack of advertising options for brands interested in Reels
- Newsweek said that Reels could kill TikTok before the government can
- CNBC reminded us this is not the first time Facebook has copied TikTok features
Celebrities have played an outsized role in the Reels launch, with some of the biggest celebrities on Instagram, like Selena Gomez (185M followers), Miley Cyrus (112M) and Lady Gaga (43M) posting Reels within their Stories the day it launched.
Creators, for their part, are generally viewing the Reels roll-out with an optimistic, glass-half-full mentality, acknowledging that apps come and go, and that platform diversification is an important part of reaching new audiences and growing new revenue streams.
What’s our take?
We see Reels as a legitimate threat to TikTok, but with a major shortcoming — it doesn’t incorporate the stickiest feature of the TikTok platform: the algorithm. So Reels may be the buzziest product feature launch of the summer, but it still feels like a half-baked cake. Here are some other areas we’re looking at…
Implications for TikTok:
We’ll be closely watching TikTok’s user growth metrics to see whether Reels can stop its momentum. TikTok already faces an uncertain future, but if we assume its perilous legal issues in the US get cleared up, what really matters is whether it can maintain its user growth trajectory. We believe it can because Reels isn’t a compelling enough feature to replace the TikTok experience for users. TikTok minus the algorithm just isn’t terribly compelling.
Another area we’re keeping an eye on is the battle for Creator loyalty. TikTok has taken steps to shore up their supply of Creator content by enticing Creators to stay on the platform with its Creator Fund. Meanwhile, Instagram flexed when it launched with A-list celebrities, but it doesn’t have an effective counter for the longtail of Creators who would need to monetize Reels (yet).
Implications for brands:
Reels has been rolled out in over 50 countries and is now available to all users. The Reels feed is currently made up of popular creators from both TikTok and Instagram but it’s yet to be seen if any brands are creative enough to properly leverage a feature that’s clearly aimed at creator discovery — something that TikTok has built its platform around, and that Instagram has deprioritized in past iterations of the app.
Reels does have one significant advantage for most brands that TikTok can’t match: the opportunity to test short-form content to an already engaged — and much larger — audience. However, we think the bigger opportunity for brands is to partner with Creators, rather than compete with them for attention.
Last, music licensing is a key consideration — and shortcoming — for brands looking to leverage Reels. Brand accounts who do not currently have access to IG Stories’ music library will not be able to use the library for Reels. So all audio will have to be directly from the brand. Brand presence outside of ads and Creator partnerships on TikTok are slim and it seems that Reels will follow this trend.
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