Facebook Reels is a force to be reckoned with
1. $Meta Platforms, Inc.(FB)$Meta is really taking TikTok very seriously that it is making Reels a focus now. YouTube had a lot more success with videos until TikTok offered short videos that became a hit.
2. Never before a Chinese company was able to produce a social media platform that is popular in the West and TikTok's success has made the big players panic.
3. TikTok already had 1 billion monthly active users. They were the fastest to hit that milestone:
- TikTok: 5.1 years
- WeChat: 7.1 years
- Instagram: 7.7 years
- YouTube: 8.1 years
- Facebook: 8.7 years
4. In terms of monthly active users, Facebook is still champ:
- Facebook: 2.9 billion
- YouTube: 2.6 billion
- Instagram: 1.5 billion
- WeChat: 1.3 billion
- TikTok: 1 billion
5. TikTok is in the big boys league now but growing faster. The big boys are simply copying its short video feed just so they don't lose out too much.
- Facebook and IG are launching Reels.
- YouTube offers Shorts.
- WeChat created WeChat Video.
6. Even the smaller players have launched short video features
- Snapchat has Spotlight.
- Pinterest introduced Watch.
- Kuaishou is a direct competitor to Douyin in China.
7. The next critical aspect of Reels is to share ad revenue with the creators. Facebook is late to the creator economy. Neither Facebook nor Instagram has ever shared ad revenue or allow influencers to make money directly (even buying stickers was a recent feature) on their platforms until now.
8. YouTube on the other hand has been one of the most generous in terms of ad revenue sharing and that attracted high quality video content being produced on the platform.
9. The quality of content is crucial to a social media platform because it draws the users to consume them. Users are not lack of options today - there are tons of social media platforms to choose from, there's also Netflix and Disney+, and then there are games. The competition for your leisure time is intense. If the content isn't good, be sure the users would move on pretty quickly and the platform loses eyeballs and eventually ad revenue.
10. Hence, Facebook has offered to share revenue to creators with Reels. The sharing amount is similar to YouTube's - 45% for the platform and 55% for the creators. I think Facebook got this right and it is a better deal than TikTok, where it doesn't share any revenue with creators. Influencers on TikTok make money via branded content instead.
11. It is still early to tell if Reels will make it but I think it stands a good chance. I don't think it will replace TikTok but it would stand with it right at the top. First is that Facebook still has the most number of users and that will boost its initial adoption of Reels. It doesn't need to acquire new users.
12. Second, the profit sharing is a right move and the money will definitely draw creators in. Granted, creators may post the same short videos on TikTok, YouTube Shorts and Reels but the fact is that users don't need to leave Facebook for better content.
13. Third, Bytedance (parent of TikTok) is facing regulatory pressure in China and they are playing coy at the moment instead of enhancing their platforms to the max. This would give Facebook Reels some time to catch up.
14. This is a crucial juncture for Facebook to rejuvenate itself and time will tell if they make it.
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