Instagram’s would-be TikTok killer, Reels, struggles to gain traction

Users and advertisers say Reels doesn't measure up to TikTok, but analysts say Instagram's new video feature shouldn't be ignored.

Instagram’s would-be TikTok killer, Reels, struggles to gain traction

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Six weeks ago, in an effort to play catch-up to the hugely popular TikTok, Instagram introduced Reels, a service for posting video clips of people dancing on roller skates and making homemade Hot Pockets. But so far, the verdict from users and advertisers is that Reels isn’t much of a threat.

TikTok users complain that Reels’ tools for editing videos are limited and that they don’t let them add as many special effects to their videos, like slow motion. And some of the young Generation Z users said Instagram, the go-to social media service for adolescents just a few years ago, is now mostly where older people hang out.

“My overall impression of…Reels has been somewhat negative,” Michael Levine, an analyst at Pivotal Research, said in a recent note to investors. “I think it’s a copycat that doesn’t have any traction just yet.”

For Instagram and its parent company, Facebook, the stakes are considerable. Reels is their most recent effort to keep up with the latest social media trends and, by extension, retain their ad dominance.

The competitive landscape, however, is uncertain. President Trump threatened to shutter TikTok, owned by a Chinese company, over national security concerns. Since then, after TikTok proposed a deal involving Oracle and Walmart, Trump both tentatively approved the combination and cast doubts on it.

What is clear is that Reels has yet to gain many users, according to mobile app data analytics firm Sensor Tower. If it had, it would likely have been reflected in an increase in the number of downloads of Instagram’s app. But the number of installs by U.S. users of Instagram from Aug. 5 to Sept. 15 totaled 4.7 million, the same number as from June 24 to Aug. 4, according to Sensor Tower.

Influencers, who are paid by brands to promote their products to their thousands of followers, generally agree that Reels lacks some of the bells and whistles of TikTok. Therefore, they don’t spend much time on it, if at all.

“Reels is pretty simple and basic,” says a 24-year-old social media influencer from Los Angeles who goes by the name of CJ Operamericano.

An Instagram spokesperson says Reels is working to “improve the experience” for users, though no major updates have rolled out yet. It’s also testing a Reels tab on the home screen of Instagram’s app in some countries, a spokesperson said, which would increase the visibility of Reels to Instagram’s 1 billion users.

Instagram declined to disclose the number of users Reels has. Instead, as proof of the appeal of Reels, it pointed to several high-profile influencers who are using the service to make videos focused on food, beauty, and dance.

But to attract some top influencers to Reels, Instagram is covering the production costs of their videos. Instagram explains that it has a “long history” of trying to bring emerging creators to its service.

Still, several influencers who are now on Reels use it merely to cross-post their videos from TikTok, which doesn’t require much extra effort. They also say it helps them show off their social media portfolio to advertisers, who want to reach TikTokers but don’t use the service.

“A lot of clients find me through [Instagram],” says Operamericano, referring to brands who do deals with her. But “TikTok is my main platform.”

Reels, whether intentionally or by coincidence, debuted at around the same time that President Trump threw TikTok’s future into uncertainty. Since then, TikTok’s owner, ByteDance, proposed spinning out the service and making enterprise software company Oracle TikTok’s “trusted technology provider.” The deal falls short of the sale that Trump had initially demanded, and just two days after offering his approval Trump suggested he may reverse course and ultimately block the deal.

Kara Billington, a 16-year-old TikTok user from Richardson, Texas, says users of Instagram, and therefore Reels, seem to skew a little older, meaning fewer dance challenges. She still uses Instagram, but not Reels. To connect with friends, she typically uses Snapchat; for watching videos, she uses TikTok.

Asked why she doesn’t use Reels, Billington says, “It’s literally another TikTok, and there’s already an app for that so there’s no point.”

Advertisers are also skeptical about Reels. A recent survey by Pivotal Research of 54 large ad agencies and advertisers found that 61% of respondents say Reels isn’t an effective competitor to TikTok. Additionally, half of the respondents were unsure whether Instagram’s ad revenue will increase because of the addition of Reels.

Despite the mostly lukewarm reception, analysts said it’s too soon to discount Reels. They cite Instagram’s legions of users who could potentially be enticed to try Reels.

“Having the power of Instagram to push Reels to users can make the difference between ‘life and death’ for a new social media format,” says Colin Sebastian, an analyst at investment bank Baird Equity Research.

There are reasons for optimism. Interest in Reels spiked when it debuted, based on the number of times users searched for it on Google, according to Sebastian. After slowing for several weeks, it’s now making modest gains again, with searches for Reels increasing 15% during the week of Sept. 9 compared to the previous week. However, searches are still four times lower now than during the week Reels debuted.

Reels has a big opportunity to become a dominant competitor in short-form video. But until it manages to step up its features, hip youngsters will continue dance their way to big money on TikTok.

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Source : Fortune More