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What’s next for Houseparty, the social video app for the social distancing age?

Houseparty, the platform that blends video chat with online games, has gone from a languishing social brand to one of the most downloaded apps in the world. Can it sustain this momentum once social distancing ends? And what will its monetization play look like once business restarts?

‘Download Houseparty!’ is the ‘add me on Insta?’ of March 2020 – the social call to action of an international society living through isolation.

While Zoom has emerged as the video conferencing system du jour for the 9-5 crowd (as well as the ‘Zoomers’), Houseparty has claimed the happy hour – the time when people want to ‘do’ something social, and not just vent about their coronavirus boredom and anxiety through a webcam.

The app taps into the user’s contact book and allows for an immediate connection to friends online. Up to eight people can enter a video chat at one time, and when the “door” to a party is left unlocked, friends of friends can walk in and join the conversation.

The social spontaneity app (there's no need for meeting IDs or even a dialing tone) is augmented by its in-app games. Parties can play rounds of trivia or the word association challenge ‘Chips & Guac’, while users also have the ability to share their phone or desktop screens with the room.

“There's brilliant imperfection attached to the live connectivity – even the fact that you can like jump into other people's house parties,” says Lore Oxford, global head of cultural insights at We Are Social. “They've managed to create a really frictionless, boundaryless intimacy, which feels about as close to real life as it can be.”

AppAnnie ranks Houseparty as the seventh most popular free app in the iOS App Store, placing it just behind social distancing peers such as Zoom and Google Hangouts. Less than two weeks ago Houseparty was ranked at 304 on the download ratings; last week alone it pulled in 2m downloads worldwide as word spread and more cities went on lockdown.

Houseparty’s meteoric rise sounds like a Covid-19 tale of overnight success. But it isn’t.

The app emerged way back in 2017 out of Meerkat, a live video streaming product that launched in 2015.

Meerkat’s brief wave of popularity among the social media community was quickly eclipsed by the heftier launches of Twitter’s Periscope and Facebook Live, and by early 2016 developers told investors they were bowing out and building a new product.

“We found the best Meerkat moments happened when people who knew each other (either in person or online) came together live and interacted in real time,” wrote Meerkat’s chief executive, Ben Rubin.

Thus, Houseparty was born.

By December 2016 the platform was boasting 1 million daily active users, 60% of which were under the age of 24, as well as celebrity fans such as Hailey Baldwin and the NBA’s Chandler Parsons. In September 2017 it reported 20 million users and a daily average use of 51 minutes.

Facebook, which tried and failed to emulate the formula in Bonfire, looked to buy Houseparty in December 2018. It reportedly let the deal go over concerns regarding user privacy, having come through the worst of its Cambridge Analytica scandal that year.

Yet despite the headlines crowning Houseparty as Gen Z’s hottest network, user growth eventually stalled by 2018. Hype was stolen by other platforms such as Instagram Stories and TikTok. The brand went on to rebrand itself as a friendlier environment (its red cup logo was replaced by an unthreatening wave, for instance) and sold to Fortnite’s owner, Epic Games, in 2019.

“The joy of Houseparty [when it first launched] was the fact it was ephemeral content,” says Oxford. “But then Snapchat came along, Instagram Stories came along and Facebook Stories came along, and so there wasn’t really a need for new ephemeral content in our feeds for a while.

"But now ... we're dealing with the sudden anxiety of not being able to connect people for weeks. That means we want to actually have live conversations with them.

"And what's interesting is Houseparty has also grown popular in a wider social landscape where we're seeing an uptick in private Instagram profiles, WhatsApp and private, community-driven Facebook groups. I think Houseparty makes a lot of sense next to them, and gives me a feeling that it will still have longevity and use after [the coronavirus] has blown over.”

Riding this second wave of growth, Houseparty will be planning for a future without social distancing. The company’s execs are currently in quiet mode, declining to comment while the pandemic goes on.

However, the brand announced earlier this month that its paid-for gaming add-ons – which the Financial Times reports are its main source of revenue – would be free for users for the foreseeable future. Meanwhile, The Drum understands the platform has paused sales activity on any new deals that drive revenue.

There currently aren’t many examples of what such deals might have looked like. Houseparty’s most high-profile monetization play so far has been with Heads Up, the game spawned from the Ellen DeGeneres show. Beginning last year, the partnership means Houseparty users can play the game in-app, while DeGeneres herself promotes the platform live on-air.

It’s this kind of natural integration that Houseparty has been looking to build into the app, rather than making room for ad space.

Sima Sistani, Houseparty’s co-founder and chief executive, told The Verge last year that company was “really starting to think about ways we can make money by bringing value to our users, not extracting value from them.” The strategy makes sense, says Phillip Huynh, head of content at DentsuX.

“Based on the current consumer experience, I don’t think that there will be much room for traditional ad formats on Houseparty as they would feel wildly intrusive,” he says. “If Houseparty is looking to develop ad products, the key for them would be to look for bespoke opportunities where an advertiser can enhance or expand what Houseparty is for consumers, similar to the Heads Up integration.

“Imagine a Spotify integration that allows you to synch music or a DJ set between actual house parties, a Netflix integration that takes ‘Netflix Party’ and scales it beyond Chrome browsers, or a Nike integration that allows you to wait for a digital SNKR drop with your seven closest friends.”

Alexandra Heide, associate director of communications strategy at Omelet, imagines an easy brand integration built into the trivia game that's already live in the app. This, she says, could look like a smaller, more personal version of the now-defunct HQ Trivia’s play with advertiser dollars.

"Brands could create a custom pack of games, or they could say ‘This game is brought to you this week by...’ and throw a few questions about the brand in there," Heide explains.

Without these integrations on offer right now, advertisers will no doubt be figuring out how to join Houseparty organically.

There are a lot of barriers in the way, however, the first being the fact that users join through their phone number and not by creating a ‘page’ a la TikTok and Twitter.

Secondly, each party can only host a maximum of eight virtual revelers, which, Huynh notes, “would limit scale of any organic effort and therefore limit potential impact”.

But a brand could create buzz, even if the event itself only directly engaged seven other people.

“Houseparty could be used by brands with a select group of their audience to have two-way communication, possibly hosted by one of their brand influencers,” says Alessio Esposito, partnerships director at Social Chain.

“With the platform currently being free to use – and the current climate putting many marketing budgets on hold – this is a great option for marketing teams to experiment with the features and find ways to keep their audiences entertained in a time that the audiences need it more than ever.”

Adds Huynh: “There may be an opportunity for smaller scale buzz-building or surprise and delight campaigns, but those wouldn’t be focused on joining a conversation – they would create or drive the conversation. For example, studios could push teaser trailers within the ‘houses’ of a few insiders, or a recording artist could host a listening party on the platform.

“Through screencaps or screen recording, this could generate a great deal of conversation for the brand, but on the other platforms that the content is shared on.”

Aside from finding a workable monetization strategy as marketing budgets get slashed, Houseparty has another obstacle to hurdle in the form of IP. Now that it’s proven the case for gamified video networking, what’s to stop Microsoft, Apple or Facebook from building a similar function into their proprietary conferencing tools?

Huynh predicts the “inevitable ‘borrowing’ of Houseparty’s core functionality by larger platforms” will occur in the next few months, ie when many users will still be stuck at home and desperate for new and novel ways to stay entertained and connected.

“Before this happens, Houseparty needs to make a clear case that, even without social distancing, their platform warrants a new set of behaviors and new social ecosystem for the consumer,” he says. “I believe that they can accomplish this by quickly expanding the current experience with additional games and other activities and focusing on features that cannot be easily replicated, either through proprietary technology or commercial deals.”

The biggest question social marketers are asking is whether Houseparty’s large audience will sustain once humanity is safe to interact IRL again. Esposito predicts “a huge drop in new users and daily active users” once social isolation is over, as people cherish real-life interactions in a way they’ve failed to for generations.

But hardly anyone knows what the platform is planning, and absolutely no one knows how the outbreak will change consumer behaviors in the long run.

So, like many things today, the future of Houseparty is more or less impossible to predict.

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