# Houseparty (2016 – 2021)

- URL: https://girisimcikafasi.com/en/startup-graveyard/houseparty/
- Sector: Social media
- Country: United States
- Total funding: $64 million
- Cause of closure: Acquired and shut down

## What did it do?

Houseparty was a social network where friends could drop into live video chats without planning ahead. Up to eight people could talk in a room, and users got a notification when friends came online. The app was available on mobile and desktop.

## Why did it shut down?

Houseparty was built by the same team behind the live-streaming app Meerkat and spread quickly, especially among teenagers. In 2019 Epic Games bought the company, and a mode was built that brought the app's video chat into Fortnite. Downloads peaked in March 2020 with the COVID-19 lockdowns, but that interest never turned into a lasting business model. In September 2021 Epic Games announced it had pulled the app from the stores and would shut the service down in October 2021.

## The story

In March 2020, as the world shut itself indoors, one app suddenly found itself at the centre of attention. Houseparty was downloaded more than 17 million times that month alone, was named “breakout of the year” at the 2020 Webby Awards and, according to Fast Company, rose to first place in the social networking category of the US App Store with 50 million downloads in total by April 2020.

The team behind the app had tried again after a failure. Life On Air, run by Ben Rubin, had launched the live-streaming app Meerkat in early 2015 and raised $12 million from Greylock Partners. Meerkat quickly became the centre of attention but did not last long, and in February 2016 the team quietly released a new product: Houseparty, which let friends drop in on the spur of the moment and offered group video chat for up to eight people. In September 2016 The Verge wrote that around a million people were using the secretly developed app. At the end of 2016 $52 million came in from Sequoia Capital.

Co-founder Sima Sistani became CEO in March 2019 and that same year led the sale of Houseparty to Epic Games, the maker of Fortnite; the price was not disclosed. In November 2020 “Fortnite Mode” was added, bringing the app's video chat into Fortnite Battle Royale. When a report emerged that the app had been hacked, Sistani denied the claim.

The sudden interest brought by the pandemic did not last, however. On 9 September 2021 Epic Games announced that it was removing Houseparty from the mobile app stores immediately and would shut the service down completely in October 2021. The Washington Post wrote that the decision was taken so the company could focus on its metaverse ambitions. The main video chat service and Fortnite Mode kept running until the closure.

Houseparty's story shows that growth driven by an external shock does not on its own prove a product's value. The app found its way into millions of lives, but became part of a large company without building an independent revenue model. When the buyer's priorities changed, an app whose most popular period was already behind it could easily be shut down.

## Lessons

- Do not mistake a sudden wave of downloads during a crisis for lasting demand; measure weekly usage after the wave has passed.
- The future of an acquired product depends on how well it serves the buyer's core strategy; an independent revenue model strengthens your hand in negotiations.
- When a product fails, the team's lessons can be carried into a new one; but after a pivot, question the revenue model early too.

## Sources

- [Houseparty (app)](https://en.wikipedia.org/wiki/Houseparty_(app))
- [Epic Games to shut down Houseparty in October, including the video chat 'Fortnite Mode' feature](https://techcrunch.com/2021/09/09/epic-games-to-shut-down-houseparty-in-october-including-the-video-chat-fortnite-mode-feature/)
- [Epic Games shuts down Houseparty app to focus on metaverse](https://web.archive.org/web/20250722164333/https://www.washingtonpost.com/video-games/2021/09/09/houseparty-shut-down-epic-games-metaverse/)
- [Epic Games, the maker of 'Fortnite', acquired teen chat app Houseparty in a surprise deal](https://www.businessinsider.com/fortnite-creator-epic-games-acquires-group-video-chat-houseparty-2019-6)