Meta, the parent company of Facebook and Instagram, remains focused on improving the monetization of its short-form video content platform Reels. Despite continued user engagement, the company noted that Reels’ path to profit is still a work in progress.
Previously, Meta reported that Facebook and Instagram users were playing over 140 billion Reels per day, with numbers having more than doubled over the past year. However, founder and CEO Mark Zuckerberg noted that Reels is not generating as much revenue as other services such as the News Feed. On the earnings call, Zuckerberg stated that Meta is on track to bring Reels revenue to a “roughly neutral” level by the end of 2023 or early 2024 and expects to profitably grow Reels thereafter.
In the fourth quarter, Facebook reached 2 billion daily active users, with the Meta Family of Apps (including Facebook, Instagram, Messenger and WhatsApp) reporting 2.96 daily active people (DAP) as of December 31. Ad impressions across the Family of Apps increased by 23% year-over-year, while the average price per ad decreased by 22% in the same period. CFO Susan Li attributed the impressions growth to Reels engagement and ad load optimizations, but noted that Reels’ monetization is lagging due to differences in ad load and video-intensive format.
Meta launched Reels in 2020, with a focus on short-form content, and continues to prioritize this with its announcement that Instagram video posts shorter than 15 minutes will automatically be shared as Reels. Despite high engagement, a report from The Wall Street Journal suggested that Reels usage still pales in comparison to TikTok, with research firm Omdia predicting that TikTok will continue to outpace Meta and YouTube in ad revenue over the next few years.
In conclusion, while Meta remains optimistic about the potential for Reels, the company recognizes that monetizing the platform remains a work in progress.