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The Wall Street Publication > Blog > Tech > The Instagram Story Gets a Few More Wrinkles
Tech

The Instagram Story Gets a Few More Wrinkles

Editorial Board Published January 31, 2022
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The Instagram Story Gets a Few More Wrinkles
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Instagram might be having a midlife crisis. Symptoms include constantly comparing itself to others and dramatic changes in behavior and appearance. If only it could buy itself a shiny new sports car.

When Mark Zuckerberg’s Facebook FB 3.83% —now Meta Platforms FB 3.83% —bought Instagram in 2012, it was certainly a rising star. And with Facebook’s deep pockets it became the hot new playground for youngsters who tired of the company’s legacy Blue app. The social media giant doesn’t regularly disclose user numbers or financials for Instagram, but has said that as of the second quarter of 2018, the platform had over 1 billion active users. Analysts believe Instagram will be Meta’s key growth driver over the next few years. A December report from CNBC suggested Instagram had doubled its monthly active user base since June 2018, while Wall Street’s fourth quarter monthly active user estimate for Meta’s legacy Blue app implies just a 32% growth rate over the same period.

The internet is changing, though. And lately, Instagram seems to be scrambling to keep up, lest its most valuable users age out. The focus on retaining youth and upping their engagement is something executives at Instagram haven’t been shy about. For a while, Instagram touted its plans to develop an Instagram-like app just for children. In September, Instagram put that project on hold, seemingly in response to fallout from The Wall Street Journal’s reporting last fall that showed Instagram can be both addictive and toxic for its younger users.

That reporting showed Meta had formed a team to study preteens (who aren’t formally allowed on Instagram) and set timelines by which to create more products for them. The documents show Meta saw “tweens” as a “valuable but untapped audience.”

Incremental value is, of course, important for a company that needs to continue to grow to justify not only its massive market value but its expensive ambitions. Perhaps even more concerning, though, was the fear of losing some of the value it had already procured. Video-first platforms such as YouTube and ByteDance’s TikTok are increasingly popular with youth today. And an analysis of respective ad managers last week showed even Snapchat reaches about 17% more young people age 13 to 24 on average in the U.S. than Instagram does. A Piper Sandler teen survey from October showed teens voting Instagram as their favorite app declined from a peak of 35% in the fall of 2019 to 22% over the two-year period. It also showed teen engagement on Instagram had declined from the previous spring.

Instagram head Adam Mosseri has been sharing semiregular updates on his own Instagram account for a while now covering the platform’s evolution and its place in the world around it. Using short-form Reels videos, he has lately depicted the app at a crossroads: “In 2022, we’re going to have to rethink what Instagram is,” Mr. Mosseri said in a 2021 recap Reel, “because the world is changing quickly and we have to change with it.”

In this and other Reels, Mr. Mosseri stresses the platform’s near-term focus on messaging, video—especially Reels—and on teens. He also describes Instagram’s intention to give users more control in the future—a shift in power, at least in theory, that has become a key theme in what tech-pundits are calling Web3. Specifically, Mr. Mosseri talks about helping creators make money on Instagram with features such as subscriptions, the first version of which he said Instagram launched earlier this month.

In a note this month, Baird analyst Colin Sebastian chalked up Instagram’s collective strategy for this year to both heightened regulatory scrutiny across social media and significant competition from the likes of Snap and TikTok, reflecting “the fast pivot toward user-generated short-form video, teens and creators.”

Members of Congress have likened Facebook and Instagram’s tactics to that of the tobacco industry. WSJ’s Joanna Stern reviews the hearings of both to explore what cigarette regulation can tell us about what may be coming for Big Tech. Photo illustration: Adele Morgan/The Wall Street Journal

But it is a lot at once. And true to Facebook’s adage “move fast and break things,” the rapid pivot hasn’t been perfectly executed. This may have already been apparent to longtime users of Instagram who joined years ago to see photos of family and friends but lately find themselves opening the app to a “Home” feed of mostly ads and “suggested posts.”

Even Mr. Mosseri himself addressed the influx of changes in an especially candid “Story” post earlier this month. He showed one user asking why he or she should use Instagram when none of his or her friends do anymore. He also showed a user asking why the platform has suddenly been adding “so much stuff,” lamenting, “Instagram used to be simple.” In response, Mr. Mosseri agreed his platform has added too much over time and needs to simplify.

Indeed, Instagram probably can’t be everything to everyone if it wants to really be something to someone in particular. In some ways, Facebook’s broad net is what caused younger Facebook users to flee. It is a delicate balance investors would be wise to weigh as Meta shifts to a new reporting structure that will spotlight the growth of its newer metaverse ambitions, while lumping all its legacy social media platforms into another segment.

The worry is that Instagram is losing its grasp on its early niche, while its competitors increasingly nail it.

Write to Laura Forman at [email protected]

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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