Houseparty aims to fend off competition from Facebook as usage stalls

Group video chatting app Houseparty almost instantly became popular with teens when it launched in February 2016 by giving them a new way to hang out with their friends online. It was like AOL Instant Messenger, but with video, for a new generation. But nearly three years later, Houseparty appears to be losing users.

In September 2017, Houseparty reported it had 20 million users who spend 51 minutes a day, on average, in the app. The company hasn’t shared user information since then but noted that time spent had gone up to 55 minutes per day this October.

Data from Apptopia, however, paints a story of an initial hype phase followed by a year of stagnation. Houseparty has been downloaded 45 million times globally, but the number of app downloads has been declining every month, according to the app analytics company. Houseparty peaked in activity in early 2017, with 2.5 million daily active users and 10.3 million monthly active users in February of that year. Now, the app has nearly 1.2 million daily active users and, in November, had 5.1 million monthly active users.

Houseparty lost most of its users in 2017, and for the past year, the app audience has remained relatively flat, according to Apptopia.

Raman Deol, Houseparty’s head of communications, wouldn’t comment on the exact numbers, but she said the pattern was accurate. Following the app’s so-called “hyper-growth” phase of late 2016 and early 2017, several technical issues tied app stability and quality led to users dropping off of the service, she said. Since the company released a rebuilt app in May 2017, she said U.S. monthly active users have nearly doubled and U.S. daily active users have tripled.

Still, Houseparty faces an increasingly competitive environment. Last September, Facebook released a group video chat app for teens called Bonfire, which it recently has been promoting on college campuses and on Instagram. Facebook also released its video chat device Portal this year and has put a massive advertising push behind it.

Houseparty hopes to fend off Facebook by launching more marketing initiatives, including “IRL activations” in early 2019. (Houseparty plans to make money in 2019, though the company declined to share specifics. Its parent company, Life On Air, has raised $70.2 million since 2013, most recently closing a $52 million Series C in December 2016. The company is not currently raising a Series D.)

Today, Houseparty’s users are mostly young, with 60 percent of its audience under the age of 24, the company said. Houseparty’s pitch to teens — and other demographics that might want to try out its service — is that it’s not like Facebook and other large social media platforms, which prioritize engagement and metrics such as likes, comments and shares. The app is about spending quality time with friends. That’s part of the reason the company decided to toss out its red solo cup logo and swap it with a waving hand. It’s also made some in-app copy changes. For example, the “stranger danger” feature has been replaced with “friend of a friend.” Compliments about appearance such as “Dang, you look good” will be exchanged with “Has anyone told you you’re awesome today?”

“I just felt like our brand wasn’t doing a good job of reflecting our mission, which was to bring empathy to online communication. That’s what I think is missing in the landscape right now: coming back to the initial promise of what social networks are about, not what they grew into, which is social media. This is a place to connect with people that you care about the most,” said Houseparty co-founder and COO Sima Sistani.

Snap CEO Evan Spiegel has been sharing similar concerns related to the negative impacts of social networks becoming social media. That’s one reason why Snap redesigned its app, separating chat and publishers to the left and the right sides of the app, respectively. Yet Snapchat’s redesign led to a public outcry from its most popular users like Kylie Jenner. And Snap is still dealing with those consequences. But Sistani did not seem concerned about ensuing backlash.

Houseparty has kept to its principles of synchronous behavior rather than asynchronous ones, such as liking, commenting or retweeting. Users can add friends, but there are no follower counts. The only element that is inherently quantitative is how many minutes a user has spent in video chats.

“We just want to be completely clear about our core beliefs. We’re about human connection over content. We’re about prioritizing qualitative affirmation, not quantitative validation. Most importantly, we’re about showing up,” Sistani said.

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