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Nothing lasts forever. Trends come and go, lockdowns as well. So,
watching our friends drink themselves silly through a screen can get boring.
In these past two years, the term party has taken a whole new meaning. But there was
one that embodied partying for Gen Z users. And, for a while, it was huge.
Even before the lockdown, Houseparty had become a go-to social network for young users. And now,
it's gone. So, what happened to Houseparty? Let's find out in Company Forensics.
There was a buzz going around the 2015 South by Southwest conference
in Austin, Texas. Everyone talked about one app and one man, Ben Rubin.
Back then, we were witnessing the revolution of live streaming.
And many caught the bug. One great example is Periscope, but we'll get to that later.
That year, in Austin, the darling was Meerkat,
and Ben Rubin was the man heading the company that had created it.
The startup was called Life on Air, but at the time, it was struggling to breathe.
The hype was such that Meerkat was already viral on Twitter and Facebook
even two weeks before the event. But Rubin didn't feel the hype. Yes,
Meerkat had millions of users, but there was no meaning. There was no connection.
Everything was fleeting. Keep this in mind for later. You see,
Meerkat noticed that millions of users signed up for the app. But then,
they did one or two live streams, got their dopamine hit, and stopped using it.
So, yes, South by Southwest was a hit, but a brief one. Plus,
there was already tough competition. For example, Twitter had purchased Periscope for $100 million.
A little competition is fine. But Twitter wasn't playing nice.
Hours after purchasing Periscope, Twitter reduced Rubin's access to graphs and users.
So, promoting Meerkat would be more challenging.
And here's where things get very interesting. What do you think Rubin did? First of all,
he was chill about Twitter's blatant effort to cut the competition. Not happy, but chill.
Then, he decided to ditch
Meerkat. That's right. He pivoted from the original idea before it was too late.
Fleeting interest and pressure from giants can be enough to make you turn away.
Life on Air did precisely that. The company used all its technology to create something
different. And that takes a lot of guts.
The new idea was video chat that allowed up to eight people to talk simultaneously. And,
now that we look back on it, it makes perfect sense. So why hadn't anyone thought of that?
Being a social network, you added friends and even separated them in different chats. Rubin's
goal was to create meaningful connections and presence, as opposed to Meerkat.
But, what if it failed? Many former employees have said that they felt
Life on Air had given up too soon. So, the company went the opposite way: total secrecy.
Life on Air didn't even put its own name. Instead, they used the COO's husband's name
because he didn't have any social networks. With such a secretive start, failure was an option.
Employees visited college campuses and explained to students how the app worked.
The idea was a hit: students created homework or even game groups.
Though it wasn't as big a hit as Meerkat, it found a core group of fans that loved using
the app. In fact, most users went back on it frequently, sometimes staying up to an hour.
Within months, the app already had users in all 50 states. But, things got tough.
Life on Air was never a big company. In the Meerkat days,
it had 11 employees. When Houseparty launched,
that number rose to 20. But still, they couldn't keep up with demand, and the app kept crashing.
Things had happened too fast. From Meerkat's launch to Houseparty's debut,
it had been just six months. With such radical changes, the investors who had dished out
$14 million were eager for results.
Then, Google, Facebook, and Snapchat said: "oh, live video chats? That's cool!" Now the heat was
really on. Life on Air hired a former Twitter engineer to help them grasp the challenges.
Things happened fast at this startup. Six months after the new hire,
the company had managed to straighten its course.
By mid-2016, the app had a million daily users. Plus,
it had fuelled enough interest for investors to keep believing in the
idea. With such successful numbers, Life on Air got $52 million in funding.
So, once again,
Life on Air had managed to breathe. But then, they noticed something interesting.
One of the greatest appeals Houseparty had was that it was free. There was no
subscription fee nor ads. That's great for users, especially young ones who don't have
money. But, it's a big challenge for a company that needs to make a profit.
Around 60% of Houseparty users were under the age of 24. And most of them used the app to
play games like Fortnite, watch Netflix and even do charades. So, why not create their own games?
In late 2018, Houseparty began offering games like word guessing.
Out of the eight users, one couldn't see the word, and that user had to guess.
While it came with a free word pack, if you wanted extra words, you had to pay $0,99.
Then Life on Air partnered with Heads Up,
a successful charades game. They even got Ellen Degeneres to promote it.
So, Houseparty didn't have impressive user numbers. But, it had loyalty.
Every user logged on for around 60 minutes, which is a lot in today's time.
Houseparty consistently ranked high in the downloads department.
But it was still a tiny fish in a big pond. So,
Life on Air introduced new features, like desktop compatibility and screen sharing.
These changes weren't enough. Life on Air hadn't revealed subscriber numbers. But,
there had been a steep decline between 2018 and 2019.
Yes, there were 35 million Houseparty downloads. But,
between Q1 2018 and Q1 2019, downloads went from 3.7 to 2.9 million.
Still, one company wanted in: Epic Games, which created Fortnite.
And it made perfect sense. Everyone used Houseparty to live stream Fortnite games.
Terms weren't disclosed, but we're sure it was good pay. But, there's something I want
to highlight. After the purchase, Epic said that it would leave the app alone for now.
This is important for later.
Gen Zs suffered during the pandemic. At an age in which we're supposed to roam free and experiment,
they were all locked down. And that's just not cool. Well, for Houseparty, it was.
Houseparty saw a spike in downloads. It reached 50 million worldwide in March 2020 alone,
17 million of them in the US.
In some markets, this was 70 times above normal. As a result,
it became the number one social app in 82 countries, including the US.
Apps like Zoom and Teams were just too serious. So, this app aimed straight at a bored demographic
that could only play video games. Plus, even when older users signed up, all they did was gaming.
So, well played, Epic, well played. And, it didn't stop there.
Epic took full advantage of this growth and even created a festival.
That's right, it was an all-out 3-day event. Katy Perry, John Legend, and Snoop all participated.
But you could also see magic tricks and even work out with Alicia Keys. The event was a hit.
In April 2020, Epic announced that Houseparty would have an exclusive
Fortnite mode for all those fans. But, there's one problem. The lockdown wouldn't last forever.
On September 9, 2021, Epic Games announced that it would shut down
Houseparty. The decision came swift and brutal. The company even withdrew the app from stores
immediately. However, those who had downloaded the app would have usability until October.
The world scratched its head. What happened? A year ago, Houseparty was a hit.
Well, a year ago, we were all locked up. Not anymore.
Epic Games have been very secretive about the shutdown. But let's look back at what they said
when they purchased it. First, Epic Games didn't have a plan beyond leaving Houseparty as is.
Then, when Houseparty shut down,
Epic Games said that it could no longer give Houseparty the attention it required.
Couldn't or wouldn't? After all, Houseparty's technology is now
in all Fornite products. There's no doubt it'll be in other social and game products.
Then, there's the boost they got from the pandemic. At that time,
it was easy to keep Houseparty alive. It fueled itself.
But, when people started going out, Houseparty lost its purpose. So, now,
it's left to die. Houseparty was a flash in the pan. Rubin ditched the idea quickly at first. And,
now, so did Epic. So, sometimes, it makes sense to ditch what doesn't work before it stops working.
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