Reels has been a popular feature for Facebook since it was introduced. It offers users a TikTok-like short form video option to share various clips and creative videos throughout the Facebook ecosystem. It’s also currently costing Meta money due to the fact that it actually cannibalizes revenue from the normal Feed. Despite this, Mark Zuckerberg is convinced that Reels can become profitable if the company develops better “monetization efficiency.”
Mark Zuckerberg spoke to the matter of Facebook Reels during the Meta Q4 2022 conference call that took place alongside the release of the company’s recent quarterly results on February 1, 2023. According to Zuckerberg, while Reels is popular, it takes away from Facebook’s Feed and loses the company money.
“Currently, the monetization efficiency of Reels is much less than Feed,” Zuckerberg explains. “So the more that Reels grows, even though it adds engagement to the system overall, it takes some time away from Feed and we actually lose money. But people want to see more Reels. So, the key to unlocking that is improving our monetization efficiency so that way we can show more Reels without losing increasing amounts of money.”
Meta leadership went on to share that ramping up Reels remains a focus in 2023 and it aims to make its costs neutral to the company by the end of 2023 or early 2024. Considering TikTok faces a lot of resistance and even a possible ban in the United States as it gears up for testimony before the US Congress, Facebook and the Reels feature are in a good place to capitalize on that space if TikTok were to become unavailable in the country. Zuckerberg also suggested that there may be more formats coming to Reels that users and advertisers may be able to take advantage of in the near future.
Even so, Reels seems to be some distance from the “monetization efficiency” Mark Zuckerberg is looking for just yet. That also wasn’t the only place the company lost money as Reality Labs reported $13.7 billion USD in losses on the year. As we continue to report on Facebook and other quarterly earnings results, stay tuned here at Shacknews.