Instagram Reels Evolves Into $50bn Revenue Engine for Meta
Instagram Reels has grown from a rapid response to TikTok’s rise into one of Meta’s most valuable businesses, with the short-form video product now generating an annual revenue run rate of more than $50bn, according to the company.
Meta chief executive Mark Zuckerberg disclosed the figure during the company’s October earnings call, noting that Reels across Instagram and Facebook had reached a scale comparable to global consumer brands such as Coca-Cola and Nike. The performance places Reels ahead of rivals in the digital video market, narrowing the gap with YouTube, which analysts estimate will earn about $46bn in advertising revenue this year. By comparison, TikTok’s revenue is projected at roughly $17bn.
Zuckerberg attributed Reels’ rapid growth to improvements in Meta’s artificial intelligence systems, which power content recommendations. He said the technology now delivers more relevant videos to users, driving a 30% year-on-year increase in time spent watching videos on Instagram.
The milestone marks a sharp turnaround for a product that initially struggled to gain traction. When Reels launched in 2020, internal data showed Instagram lagging far behind TikTok in user engagement. By 2022, time spent on Reels was reportedly just a fraction of that recorded on TikTok, raising concerns about Instagram’s ability to compete in short-form video.
According to Instagram’s vice-president of product, Tessa Lyons, the challenge required a fundamental rethink of how the platform ranked content. Instagram had traditionally focused on posts from people users followed, whereas TikTok’s model prioritised discovery based on viewing behaviour and inferred interests. Shifting to that approach demanded more advanced AI capable of analysing engagement signals almost instantly.
Meta also invested heavily in encouraging creators to post original content, helping refine its recommendation systems as engagement increased. Over time, Reels became better at matching videos to individual preferences, even when users had no prior connection to creators.
Data from market intelligence firm Sensor Tower shows the impact of those changes. The average Instagram user now spends about 27 minutes a day watching Reels, compared with 21 minutes on YouTube Shorts. TikTok still leads the sector, with users spending an average of 44 minutes daily on its main feed.
Meta is now looking beyond mobile screens. The company has begun testing an Instagram experience designed for televisions, starting with a limited rollout on Amazon Fire TV devices in the United States. Lyons said research showed that many users were already watching Reels on their TVs by casting from their phones, prompting Meta to develop a dedicated viewing format.
The move brings Instagram into more direct competition with YouTube, which dominates video consumption on television screens in the US. Meta believes success on TV could further expand Reels’ reach and revenue.
At the same time, Instagram is introducing new tools to give users greater control over their video feeds. Recent updates allow viewers to steer recommendations by indicating what they want to see more or less of, while features like Blend enable friends to combine their preferences into a shared feed. Meta plans to extend these personalisation options to its TV experience, aiming to make Reels adaptable to both individual and group viewing.
