Earlier quoted context omitted.
If you talk to daily Instagram users, you'll find out what problem it solves. In particular, it was the lucky winner in the crowd of early photo-sharing-on-mobile apps. But the demand for that was proven by early photo sharing successes like Flickr. Realizing people would want to do that on their pocket camera device is not a big leap given what people were already doing to share photos from their mid-aughts cameraph…
I (and probably everyone in immigrant communities) will get such a thing to my family and our parents as soon as we can afford it.
Another issue here is that this is being sold as like "being there", but it's more like "being there at a jail" where you can see person but can't get close to them, can't touch them, can't hand them anything. I have immigrant friends who do calls with their parents basically daily. They do it with mid-grade consumer tech, even though they could easily afford big screens and high-res cameras. That suggests to me that image size and video quality are not as important for this market as one might think at first blush.