In less than 2 years, Netflix will celebrate the 20th anniversary since its public launch. Over the period of those 2 decades, the face and business model of the company has changed completely. What started as an US-only DVD-by-mail service became a global platform for on-demand streaming of shows and movies.
At some point after the millennium shift, the company’s CEO Reed Hastings realized that physical media has no future. In order to survive, he had to “pivot” his company and switch to streaming video. But he could not do it from one day to another. He didn’t want to damage the brand and upset its millions of subscribers. Furthermore, he needed the splendid revenue from the DVD business to finance the new initiative. So he introduced streaming as an additional service and turned it into the company’s core only very slowly, over a couple of years. Today, the DVD-by-mail still exists, but has lost 75 % of its members since the peak in 2010. At one point in the future, it will vanish.
The history of Netflix as analogy for Instagram
The Netflix case is one of the rather rare examples where a company managed to radically transform itself before technical advancements and changing customer desires would make it obsolete. What Netflix pulled of can help to understand recent news coming from Instagram.
Instagram just introduced its “Stories” feature, which lets people share ephemeral photos and videos that disappear after 24 hours. As has been widely reported and acknowledged by Instagram’s CEO Kevin Systrom, Stories is almost identical to a Snapchat feature with the same name (“Stories”). Whether one likes it or not doesn’t matter: Instagram Stories is the new thing, and it plays a critical strategic role for the Facebook-owned company: There is a chance that Instagram’s iconic stream of carefully crafted, heavily filtered shots is the equivalent of Netflix’ DVD-by-mail offering and is poised to become outdated and neglected over time. Applying this analogy, Snapchat Stories won’t just be an additional feature within Instagram. It would eventually become the core and heart of the app; what Instagram stands for.
Certainly, it’s much harder to predict the future of the classical Instagram feed than it was for the Netflix CEO to forecast the decline of the DVD. However, there is a case to be made for seeing Instagram’s scrollable photo & video feed as threatened in the mid- to long term:
Instagram’s feed was built for the early smartphone years
When Instagram launched back in 2010, smartphones just experienced their grand breakthrough. Suddenly, millions carried fairly good cameras in their pockets, and Instagram as well as a couple of copycats leveraged these cameras and people’s excitement about the new ability to share everything they see with the world, instantly and edited for beauty.
In 2016, the novelty of smartphone cameras and Instagram’s filters has worn off. As has the excitement and enthusiasm about fine-tuned photos of coffee art, sunsets, beaches and colorful food compositions. Of course millions still publish these kind of things on the service every day. Once something becomes a habit, it sticks. Nevertheless, over time and with new, more innovative and more creative services, an existing app concept can start to feel antiquated. This is exactly what Snapchat Stories did to Instagram: It made Instagram and its endless scrolling look and feel a bit dated. The seamless sharing and consumption of videos (and photos) on Snapchat is just a more modern, contemporary and fun experience (the clunky, not intuitive user interface aside). Also, after years of edited Instagram photos showing the happy, pretty and sometimes artificial sides of life, authenticity is in great demand. Snapchat Stories’ ephemeral character – meaning that photos and videos can only be watched for 24 hours – totally hit a nerve.
Usage patterns of long-term users matter
Again, it is hard to predict the future of the Instagram feed. The app keeps growing and it just crossed the 500 million active user milestone. However, what’s more interesting is whether early users are still as much into Instagram as before. At least in the US, the user numbers seem to have stalled. Among US teens, Snapchat has risen to become the “most important social network”. Also in the US, Snapchat has overtaken Instagram regarding the amount of time users spend in the app.
These statistics don’t tell too much about usage patterns of long-term Instagram users. But considering these statistics and factoring in the general excitement about video and services specifically built for video as well as the common human tendency to seek new experiences, I’d say chances are bigger that Instagram’s feed won’t exist anymore in 5 years than that it still will exist. However, the only entity that might be able to make an accurate prediction right now based on actual user data is Instagram itself. And the fact that it launched Stories the way it did and basically forced it into everyone’s field of attention – even though Stories must be considered a completely different product than Instagram’s scrollable feed – is an indicator for that the company could be witnessing, on average, decreasing user activity of certain user groups.
What happens next
In the end, there are 2 ways to understand the launch of Instagram Stories: Either CEO Kevin Systrom and his boss, Facebook CEO Mark Zuckerberg, think that Instagram should accommodate two or even more different types of services within one app in order to compete with Snapchat (in fact, Snapchat pretty much also consists of multiple different products). Or they indeed see Snapchat Stories as something comparable to Netflix’s early streaming ambitions: A new service which eventually could replace the original one. That of course would require Stories to become a hit. At the moment, even Systrom and Zuckerberg probably don’t have enough internal data to know for sure that Stories will catch on – probably. So obviously they won’t have decided yet about a roadmap for abandoning the feed. But their reasoning might go like this: If user adoption for Stories looks good and reaches certain set Key Performance Indicators (KPA), it will be pushed hard and given an increasing amount of attention and room within the Instagram app. If that happens, the importance of and activity within the classical Instagram feed will naturally drop. And that would be its death*.
Instagram Stories has the potential to be a pivot akin to the one Netflix did. But it all depends on whether users like it, of course.
*There is bonus scenario: If user adoption goes well, Instagram could eventually launch a second app and force people who started to enjoy the Stories feature into that one, similarly to how Facebook proceeded with spinning off Messenger. But that would preserve Instagram the way it is and thus only makes sense if Instagram’s internal numbers do NOT indicate, on average, a decreasing activity among long-term users.
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