Facebook Unveils Instagram Videos Challenging Twitter

June 20 (Bloomberg) -- Instagram CEO and Co-Founder Kevin Systrom demonstrates Facebook's Instagram video service. (Source: Bloomberg)

Facebook Inc. (FB), operator of the largest social network, is adding video to its Instagram photo-sharing service for smartphones, stepping up competition with microblogging site Twitter Inc. (TWTR)

The new feature lets users capture, upload and share clips as long as 15 seconds, Kevin Systrom, Instagram’s co-founder, said at an event today at Facebook’s headquarters in Menlo Park, California. The service includes filters, a popular feature brought over from the photo service, he said.

Facebook Chief Executive Officer Mark Zuckerberg, who acquired by Facebook last year for more than $700 million, is adding products and services to attract users and advertisers. The video tool will vie with Twitter’s Vine, a mobile application that lets users share brief video clips and ranks among the most popular applications for Apple Inc. (AAPL)’s iPhone.

“In the way that Twitter kept Vine very simple, Facebook is keeping Instagram video very simple,” said Brian Blau, an analyst at Gartner Inc. based in San Francisco. “Facebook and Instagram both have a very large reach. That is as significant as the features themselves. There’s always going to be some of the feature battles between these companies.”

Photographer: David Paul Morris/Bloomberg

An attendee shoots video on a smart phone using the new video feature of Instagram as Kevin Systrom, chief executive officer and founder of Instagram Inc., speaks during an event at Facebook Inc. headquarters in Menlo Park, California on June 20, 2013. Close

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An attendee shoots video on a smart phone using the new video feature of Instagram as Kevin Systrom, chief executive officer and founder of Instagram Inc., speaks during an event at Facebook Inc. headquarters in Menlo Park, California on June 20, 2013.

Vine videos are limited to six seconds, while clips on Google Inc. (GOOG)’s YouTube can last minutes or longer. Instagram’s video application, which will be available for iPhones and smartphones running Google’s Android software, lets users edit what they capture and also includes technology to smooth out shaky videos, Systrom said.

Video Sharing

“You have to give a plus-one to Facebook at this point because they’ve added some extra features that are going to make the content a bit more compelling and more immersive,” Blau said. “At some point in the future Facebook will attempt to monetize Instagram,”

Systrom said more than 16 billion photos have been shared on Instagram and that the service has more than 130 million monthly users.

“We need to do to video what we did to photos,” Systrom said. “This is really driven by consumer demand and not by business need. I don’t think we designed it with any advertising in mind. I think over time we’ll figure out how advertising in general -- video, regardless of the medium or photos -- ends up being OK on Instagram in a useful way for users and for businesses.”

Facebook shares declined 1.7 percent to $23.90 at the close in New York. The stock is down 10 percent this year, compared with a 11 percent gain in the Russell 1000 Index.

Photographer: David Paul Morris/Bloomberg

Instagram Inc. Chief Executive Officer and Co-Founder Kevin Systrom speaks during an event at Facebook Inc. headquarters in Menlo Park, California on June 20, 2013. Close

Instagram Inc. Chief Executive Officer and Co-Founder Kevin Systrom speaks during an... Read More

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Photographer: David Paul Morris/Bloomberg

Instagram Inc. Chief Executive Officer and Co-Founder Kevin Systrom speaks during an event at Facebook Inc. headquarters in Menlo Park, California on June 20, 2013.

Instagram “will always become a business over time,” Systrom said. “There’s a natural business opportunity there.”

To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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