In a stunning corporate turnaround, Meta Platforms' short-video feature, Reels, has transformed from a struggling TikTok clone into a financial juggernaut. CEO Mark Zuckerberg revealed in October that Instagram and Facebook Reels have achieved an annual run rate of $50 billion, putting it on par with global giants like Coca-Cola and Nike in revenue terms.
From Copycat to Cash Cow: The Reels Revolution
The journey began in August 2020 when Instagram, caught unprepared by the explosive success of ByteDance's TikTok, hastily launched Reels. Initial performance was dismal. By 2022, internal data showed Instagram users spent only one-tenth the time on Reels compared to TikTok, with engagement reportedly falling for weeks. A Wall Street Journal report from that period noted that most Reels users had "no engagement whatsoever."
The fundamental challenge, as explained by Instagram's Vice President of Product, Tessa Lyons, was twofold. First, they had to integrate short-form video into an app synonymous with photo sharing. Second, and more crucially, they had to master a new content ranking system. Unlike Instagram's traditional "following graph," which showed posts from friends and followed accounts, TikTok's model relied on showing users content from strangers, using sophisticated AI to gauge interest based on watch time.
Meta's breakthrough came from a relentless focus on its own AI recommendation engines. "Video is a particular bright spot," Zuckerberg stated, highlighting that time spent watching videos on Instagram surged by 30% year-over-year. The company aggressively promoted original content and incentivized creators to post. As user scrolling time increased, the algorithm became sharper at predicting preferences.
Winning the Attention War: Reels vs. The World
The strategy has paid off handsomely. Today, the average Instagram user spends 27 minutes daily on Reels, according to Sensor Tower estimates. This outpaces YouTube Shorts (21 minutes), though TikTok remains the undisputed leader at 44 minutes per day. The financial impact is monumental. Reels' $50 billion run rate now exceeds the projected $46 billion in ad revenue for YouTube this year and dwarfs eMarketer's $17 billion estimate for TikTok.
Content creator Brock Johnson from Park City, Utah, observes a tangible shift. "A lot of my friends are now sending me Reels every day... whereas even just like two years ago, that wasn't really the case," he said, underscoring the feature's new cultural relevance.
The Next Frontier: Conquering the Living Room Screen
Flush with success, Meta is setting its sights on a new frontier: television. The company recently began testing Instagram for TV on Amazon Fire TV devices in the U.S., marking the first step in a broader 2026 expansion plan. Lyons noted that research showed many users already watch Reels socially by mirroring their phones to TVs, a behavior YouTube has successfully capitalized on, becoming the top TV video provider in the U.S.
To prepare for this living room push, Instagram has introduced features designed for shared, lean-back viewing. The 'Blend' feature, launched in April, creates custom video feeds by merging the algorithmic preferences of a user and their friends. More recently, Instagram added controls allowing users to directly guide their algorithm by indicating content they want more or less of.
"When you're on TV, you want to be able to just tap in to the right type of content, whoever you're sitting with," Lyons explained, signaling a future where Reels becomes a central part of group entertainment. From a revenue-less imitation to a $50 billion powerhouse eyeing the TV screen, Meta's Reels has completed a remarkable five-year evolution.
