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Houseparty

Video-based social media app
Startup Cemetery
GENERAL INFORMATION
Category:
Social Media
Country:
United States
Started:
2011
BUSINESS FAILURE
Outcome:
Shut Down
Cause:
Lack of Focus
Closed:
2021
FOUNDERS & EMPLOYEES
Number of Founders:
4
Name of Founders:
Ben Rubin, Itai Danino, Sima Sistani, Uri Haramati
Number of Employees:
10-50
FUNDING
Number of Funding Rounds:
7
Total Funding Amount:
$70.2M
Number of Investors:
36

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If you were one of the many people who relied on social media and video conferencing apps to stay connected with friends and family during the COVID-19 pandemic, chances are you’ve at least heard of Houseparty.

Like Zoom, Houseparty was one of the video chat platforms that rose to prominence during the pandemic. However, its success was far more short-lived than that of Zoom, and the Houseparty app shut down in October 2021.

So, what happened to Houseparty? This article will go over all the frequently asked questions people have about why Houseparty shut down.

What Was Houseparty?

Houseparty was a video-based social media platform that allowed users to connect via video calls and chats. It was available for Android and iOS, as a Chrome extension, and via the Houseparty website.

Houseparty's UX

Unlike other video conferencing apps that boomed in popularity during the pandemic, such as Zoom, Houseparty was not intended for holding professional video meetings. 

Instead, Houseparty was geared more toward the younger generation and purely social uses. The app included fun features like the ability to drop in and out of video chats at random and in-app games, like Uno, Heads Up, and trivia.

Houseparty also allowed users to stream their Fortnite (the incredibly popular Battle Royale video game by Epic Games) gameplay to their friends and other users via the platform — but more on that later.

These features made the younger, more social media-oriented generations flock towards using Houseparty during the pandemic to fight off the loneliness of lockdowns and stay connected with friends and family who they couldn’t see in person.

In fact, Houseparty reportedly received 50 million downloads between April and March of 2020, as strict lockdowns were being implemented in different countries worldwide. 

What Happened To Houseparty?

The beginning of the end of Houseparty actually came about before the pandemic, when it was acquired by Epic Games (remember the Fortnite connection?) in June of 2019.

Just two years later, Epic Games announced that they would be shutting down Houseparty in October of 2021, stating that they would be incorporating the platform’s technology and social features into Fortnite and the broader Epic Games metaverse.

But to really understand what happened to Houseparty, let’s back up to the beginning.

A Closer Look at Houseparty’s Journey

Houseparty was a subdivision of a company called Life On Air, a live video streaming platform originally founded in Israel in 2012 by entrepreneurs Ben Rubin and Itai Danino.

Life On Air’s first big venture was a social media app called Yevvo, launched in 2013 after the company’s co-founders raised a small seed round of funding.

Yevvo

Yevvo allowed users to follow friends, events, locations, and more, but it never really gained its own following. So, Rubin and Danino decided to move to San Francisco to be closer to Silicon Valley and continue developing their ideas and seeking out investors.

The duo’s next app was called Meerkat and immediately gained 120,000+ users, including Gary Vaynerchuk and Ashton Kutcher, just two weeks after launching in 2015.

Meerkat allowed users to live stream events and such to their Twitter followers (this was before live streaming via platforms like Instagram, Facebook, and TikTok became popular).

Meerkat

Despite its early success, Meerkat’s functionality was quickly shut down by Twitter, which cut off access to its social graph API. This was largely due to the fact that Twitter had just acquired a similar app called Periscope, to which Meerkat posed competition.

However, all the high-profile attention on Meerkat allowed the co-founders to raise $14 million in funding, and things were looking up, as they were also able to make a deal with Facebook to use their social graph instead of Twitter’s.

Unfortunately for Meerkat, Facebook launched its own live streaming platform just a few months later, which essentially dashed all hope of Meerkat becoming the next big thing.

Despite all these ups and downs, Life On Air’s co-founders still had a significant chunk of funding left. So, as many successful startup co-founders have done in the past, they pivoted and started working on a third idea, which turned out to be Houseparty.

Houseparty launched in February 2016, and within just a few months of being released, it had already gained more users than Meerkat ever had. But, the rapid growth also put a strain on the platform, which couldn’t handle so many users at the beginning.

To tackle the problem, Life On Air moved its engineering team from Israel to San Francisco and brought on a new head of engineering.

This move seemed to be the right one, as the company was able to keep growing and get investors interested enough to earn them $52 million in funding in another seed round held in December 2016.

Houseparty's VC funding rounds

By the end of the following year, Houseparty had received more than 20 million downloads and continued to add features to the app, such as the ability to play games within the video chatting platform.

A couple of years later, in 2019, Houseparty started monetizing its user base by introducing paid game content, such as additional decks in Heads Up.

But it was too little too late — growth of the app was slowing and funding was running out, and the company ended up selling to Epic Games that year for $35 million.

What Happened To Houseparty During the Pandemic?

Epic’s timing in acquiring Houseparty couldn’t have been better since Houseparty, like many other online social platforms, saw such an unexpected boom in growth when the global pandemic hit.

As we mentioned earlier, the app was downloaded by 50 million+ additional users at the beginning of the pandemic in early 2020 and became the number one social platform in 82 countries around the world.

Houseparty's app installs

Later that year, Epic Games began integrating Houseparty with Fortnite, which made it even more popular among the younger generations.

But, on September 9th, 2021, Epic Games made an unexpected announcement that the Houseparty app would be shutting down the following month.

Why Did Houseparty Shut Down?

Several reasons contributed to Houseparty shutting down, including the end of the pandemic, a lack of funding, and Epic Games focusing on other areas.

End of the Pandemic

Even though Epic Games didn’t say so in their official explanation of why Houseparty was shutting down, it’s certain that declining interest as COVID-19 lockdowns were lifted was one of the biggest reasons.

Other, more work-focused video conferencing apps remain popular in the post-pandemic world because so many people continue to work from home and remotely. But Houseparty’s download numbers and user activity dropped as people were allowed to go back to socializing in person.

It’s likely that Epic’s original reason for acquiring Houseparty was to incorporate its technology into Fortnite and other Epic Games creations and to shut it down eventually. They just put these plans on hold during the pandemic when Houseparty’s popularity was skyrocketing.

Lack of Funding

Another likely reason for the Houseparty app shutting down is the lack of funding. We already mentioned that the company was running out of funds when it was sold to Epic Games, which was one of the main reasons behind the sale.

Epic Games probably looked at their options and saw that they would have to invest a significant amount of money into kickstarting Houseparty’s growth again after the pandemic, and it made more sense to shut it down and fold its tech and team into other business channels.

Epic Games Shifting Focus

According to The Guardian, the official announcement made by Epic Games about shutting down Houseparty stated that “The team behind Houseparty is working on creating new ways to have meaningful and authentic social interactions at metaverse scale across the Epic Games family.”

It also said, “Since joining Epic, the Houseparty team’s social vision and core technology have already contributed to new features used by hundreds of millions of people in ‘Fortnite’ and by developers around the world.”

Houseparty's integration with Fortnite

Epic Games went on to explain that it could no longer give the app or its community the attention they deserved, which shows that its focus was on other areas, specifically the Epic Games “metaverse.”

Will Houseparty Come Back?

Epic Games has not announced plans to bring Houseparty back after it shut down the app and pulled it from app stores.

Houseparty users were notified of the shutdown via in-app notifications, and the platform stopped working for them shortly after it was no longer available to download.

Judging by this sudden departure and the company’s statement regarding the Houseparty app’s ending, it seems pretty clear that Houseparty, as we knew it, is gone for good.

According to TechCrunch, none of Houseparty’s team members were let go when the app shut down. They moved to different teams at Epic Games to work on other ways to integrate social interactions into Epic’s suite of products.

It remains to be seen whether or not this is the last we’ve heard of Houseparty or if the company’s name will pop up somewhere in the metaverse in the years to come.

Frequently Asked Questions:

Who Created Houseparty?

Houseparty was created by Ben Rubin and Itai Danino as a subdivision of Life On Air, a company originally founded by the pair in Israel in 2012.

What Year Did Houseparty Come Out?

Houseparty’s co-founders launched the app in 2016 after several other ideas based on live streaming, which didn’t work out.

The app was an instant success and grew to around one million daily active users in the first year.

How Much Funding Did Houseparty Raise?

Houseparty managed to raise just over $70 million in venture capital, according to the company’s Crunchbase profile. Its last fundraising round was a Series C round held in December 2016.

Houseparty had 36 investors, including Sequoia, NFX, and Aleph. Sequoia was the venture capital firm to invest the most in Houseparty, giving them an impressive $50 million.

Who Was Houseparty For?

Houseparty was most popular among the younger generations and the under-40 crowd into gaming and social media.

In-app games (like Uno, Heads Up, and trivia) and the eventual integration with Fortnite solidified Houseparty as a go-to video chatting platform for gamers and streamers — if only for a short time.

During the pandemic, Houseparty also became what some users referred to as a “support group” for connecting with others and coping with pandemic-related depression.

Who Bought Houseparty?

Epic Games bought Houseparty in 2019, as the company’s growth was slowing and funding was running out, for $35 million.

Although Epic’s initial plans for the acquisition are not clear, it’s likely that they put them on hold because of the unexpected boost in popularity the COVID-19 pandemic gave the app.

When Did Houseparty Shut Down?

Epic Games discontinued Houseparty as of October 2021, giving a vague explanation about focusing on the metaverse as the main reason for Houseparty shutting down.

Although it wasn’t explicitly stated, it’s very likely that a sharp decline in daily active users after the pandemic and a lack of funding contributed to the decision.

Are There Any Houseparty Alternatives?

During its lifetime, Houseparty’s biggest competitors included Facebook and Instagram Live, Snapchat, Twitter, Discord, and other video streaming and social chatting apps.

Other lesser-known apps for video chatting while playing mobile games or watching videos together include Bunch, Rave, Airtime, and Squad.

Wrapping Up

It’s a particularly interesting time to look at case studies of different startups that have experienced ups and downs over the past few years because we can see clearly how big of an impact the COVID-19 pandemic had on so many businesses.

Pandemic lockdowns led to huge spikes in active users for certain apps, especially video conferencing platforms like Zoom and Houseparty. Yet, not all of them were able to continue enjoying success post pandemic.

Looking at what happened to Houseparty, it’s hard to say with 100% certainty what all the reasons for its closure were. Still, a sharp decline in users after pandemic restrictions started getting lifted definitely played a role.

That being said, it will be interesting to see what legacy Houseparty leaves behind in the Epic Games family of products as the company develops its metaverse.

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