Facebook's Instagram Beefs Up Videos To Challenge Rivals

Facebook FB is leaving no stone unturned to boost user and advertising base of its photo and video sharing platform, Instagram.

The recent news regarding Instagram planning to offer longer videos up to an hour on the platform is viewed as the company’s gambit against Alphabet’s GOOGL YouTube and Snap’s SNAP Snapchat Discover platform.

TechCrunch reported that a dedicated space will be offered by Instagram that will feature scripted shows, music videos, and more in vertical orientation and 4K resolution. Moreover, Instagram is reportedly meeting social media stars and content creators to produce long-form videos for the platform.

However, the videos will not be of the same level as Netflix NFLX Originals or HBO, rather it would be focused more on YouTube level content, adds TechCrunch.

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Instagram to Drive Advertising Revenues

Facebook is adding to Instagram by expanding its advertising offerings as well by taking a number of initiatives to boost user base. We note that Instagram’s popularity has exploded in no time with the addition of Boomerang, Stories, Live Videos and exciting new filters, which keep users hooked on to the platform.

The company’s latest move to expand video offerings on the platform will provide more reasons for users to not migrate to any other platforms like YouTube. Moreover, it will also attract advertisers by providing longer video content.

Notably, Facebook is trying to capture a larger slice of the video advertising pie, which is currently the most dominant form of advertising. The company had earlier mentioned that video has been emerging as a “megatrend” and will be the key catalyst among all product lines.

Facebook is therefore investing in Instagram, which is poised to be a big part of the future of video sharing. The company noted on the last conference call that both from an engagement and business perspective, Instagram is doing really well. We believe that with rising video consumption, Instagram stands to benefit from the upcoming change.

The platform crossed 800 million monthly active users, surpassing peers like Twitter (336 million). Moreover, Instagram Stories, an unabashed copy of Snapchat’s feature of the same name, has more than 300 million daily actives. In contrast, Snapchat’s total DAUs stand at 191 million.

A survey report from eMarketer projects that Instagram will generate $5.48 billion in ad revenues in 2018, accounting for more than 5% of U.S. digital ad revenues. Moreover, the report forecasts Instagram’s share of mobile ad revenues to account for nearly 28.2% of Facebook's U.S. mobile ad revenues in 2018.

Facebook currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

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