If rumors prove true, Facebook’s photo-sharing app Instagram may soon include the ability to take and share short videos, similar to how Vine works. Following the company’s release of a hashtag feature and the rollout of its new iPhone and Android features, Facebook has scheduled a product launch event for Thursday in Menlo Park. “A small team has been working on a big idea,” reads the invitation. “Join us for coffee and learn about a new product.”

While speculation has been swirling around the possibility of Instagram video, it’s worth noting that Facebook did not hold a press event for its new hashtags, but did note it would provide additional announcements in the coming weeks about its public conversation features.

Yesterday, we reported that product manager Greg Lindley wrote about the hashtags in a Facebook blog post.

“We’ll continue to roll out more features in the coming weeks and months, including trending hashtags and deeper insights, that help people discover more of the world’s conversations,” wrote Lindley.

“Earlier, we wrote it could launch a news-reading app, but we have since heard more details that point to something else entirely,” reports TechCrunch. “On June 20, a source says Facebook will unveil that Instagram, its popular photo-sharing app, will begin to let people also take and share short videos. Call it the Vine effect.”

Video-sharing services such as Vine are gaining in popularity. Others include Viddy, Cinemagram and Socialcam.

Four weeks ago, Matthew Keys of The Desk reported that Facebook was testing the Instagram video feature internally. He described it as a feature that allows 5-10 seconds of video to be recorded from mobile devices and uploaded to Instagram for sharing. He did not know at the time whether the app would include Instagram filters.

“Adding video to Instagram would pit Facebook’s photo sharing application against Vine, an application acquired by Twitter in October 2012 and launched to the public in January 2013,” explains Keys. “Vine allows users to upload six seconds of video with audio, then cross-post video to Twitter, Facebook and other social networks.”

TechCrunch notes that Instagram, which was purchased by Facebook last year for $715 million, currently has more than 100 million monthly active users. Adding a video service would “mean one less app and social network for users to build up, and, for those who like to take and share videos, another reason to visit Instagram. You can see how something like video could be a very sticky complement to its photo service,” suggests the post.

“There could be another reason for adding video to the service: it’s a very attractive medium for advertisers and marketers.”

ETCentric will have more on the story as it unfolds.