Five years ago, Meta's Reels was a TikTok copycat with no revenue. Now, it is set to bring in as much as Coca-Cola and Nike -- and the company plans to expand to more screens in 2026.
Meta Platforms Chief Executive Mark Zuckerberg announced on an October earnings call that Instagram and Facebook Reels had surpassed a $50 billion annual run rate, which means that the company is on track to make that amount of revenue in the next 12 months. By comparison, analysts expect YouTube to bring in $46 billion in advertising revenue this year, and the research firm eMarketer estimates TikTok will bring in $17 billion.
Zuckerberg credited the company's AI recommendation systems which, he said, have been delivering higher quality and more relevant content on its platforms.
"Video is a particular bright spot," he said, noting that people were spending 30% more time watching videos on Instagram than they did the previous year.
It is a far cry from just a few years ago, when internal Meta research showed that Instagram was stumbling in its attempt to mimic TikTok. Caught flat-footed by the success of that video app, then owned by ByteDance, Instagram launched Reels in August 2020.
By 2022, Instagram users were spending one-tenth the time watching Reels as they did on TikTok, The Wall Street Journal reported at the time. One document said Reels engagement had been falling over the previous four weeks and that "most Reels users have no engagement whatsoever."
Tessa Lyons, Instagram's vice president of product, said the first challenge was figuring out how to introduce short-form video into an app that had primarily been known as a place for people to post photos and connect with their friends and the creators they follow.
Then they had to help people find Reels from accounts they don't even follow. "That's an entirely different ranking challenge from the way that we originally had to think about ranking content," she said in an interview.
Instagram's algorithm previously had been built on a following graph, meaning it primarily showed users posts from people they followed -- either friends, celebrities or creators. TikTok upended the idea of the following graph, instead showing users videos from accounts they didn't follow and figuring out what they liked based on how long they lingered on each video.
Instagram had to figure out how to do that much harder task, too.
It focused on promoting original content and paying creators to post on the platform. As people spent more time scrolling Reels, the algorithm got better at predicting what users wanted to see.
Five years on, something has started to click.
The average Instagram user is now spending 27 minutes a day watching Reels, versus YouTube Shorts users' watching for 21 minutes on that platform, according to estimates from market intelligence firm Sensor Tower. (TikTok is still king with the average user spending 44 minutes a day scrolling its main feed.)
Brock Johnson, a 28-year-old content creator in Park City, Utah, has posted regularly on Instagram since 2017. He said he has noticed a change on the platform recently.
"A lot of my friends are now sending me Reels every day and we're talking about things that we saw on Reels, whereas even just like two years ago, that wasn't really the case," he said.
The company says it has "turned a corner" and now plans to build on that momentum by launching Instagram for TV. A few weeks ago, Meta announced the first step toward that goal, rolling it out on Amazon Fire TV devices in the U.S. as a test.
Lyons said Instagram knew from research that a lot of people already were watching Reels with their friends by mirroring their devices on a TV.
YouTube has seen success in the TV market, and last year, it became the most-watched video provider on TVs in the U.S. People also now watch more YouTube on TV sets than on phones or any other devices.
Instagram wants a slice of that pie.
In April, it launched a feature called Blend that lets people create custom feeds of videos based on the algorithms of a user and his or her friends. Lyons said it makes for a more social viewing experience.
Last month, Instagram launched another new feature that lets users more directly control the videos their algorithm shows them by telling it what they do and don't want to see. (More puppies, fewer gender reveal parties gone wrong.)
Lyons thinks that will help with the push into TV. "When you're on TV, you want to be able to just tap in to the right type of content, whoever you're sitting with," she said.
