How Does Houseparty Make Money? Houseparty Business Model In A Nutshell

  • Houseparty is a social networking service incorporating video chat on mobile and desktop apps. The platform is the brainchild of Ben Rubin and Itai Danino, Israeli developers who also created the similar service Meerkat.
  • Houseparty has an underdeveloped revenue generation model. Currently, the company makes money through the sale of in-app items designed to enhance gameplay. 
  • Houseparty CEO Sima Sistani wants to avoid introducing advertising on the platform for fear of degrading the user experience. Moving forward, the platform may instead focus on monetizing other games or game-like experiences with partners.

Origin Story

Houseparty is a social networking service incorporating video chat on mobile and desktop apps. The platform was created by Israeli developers Ben Rubin and Itai Danino in 2015.

Three years earlier, Rubin and Danino founded Life On Air to develop several social media platforms. One of these platforms was Meerkat, a live-streaming app created in just eight weeks and connected to Twitter’s social graph. Meerkat was an instant hit because users could transfer their Twitter friends without starting from scratch. The platform also received several high-profile endorsements from the likes of Gary Vaynerchuk and Ashton Kutcher.

However, Twitter soon cut access to the social graph after it acquired competing service Periscope. User growth then began to stagnate, so Rubin and Danino attempted to bolster its popularity by partnering with Facebook and the Discovery Channel. By the beginning of 2016, the founders saw the writing on the wall and decided to pivot.

Houseparty was then developed in February that same year, using millions leftover from a previous funding round. The new platform, touted as a live-video social network, reached the number two position in the Apple App Store just three months after launch. Life On Air headquarters then moved from Israel to San Francisco to better manage the surge in users.

By the end of 2017, some 20 million people had downloaded Houseparty. Less than two years later, Epic Games acquired the platform for around $35 million.

Growth continued virtually unabated during 2020 as millions were forced into pandemic-induced lockdown. The platform was downloaded more than 17 million times in March 2020, no doubt helped by integration with games such as Fortnite, Uno, and Magic 8-Ball. 

Houseparty revenue generation

At present, Houseparty has a somewhat underdeveloped revenue generation strategy.

The company earns some money through in-app purchases. For example, the app teamed up with Warner Brothers to create a new version of Heads Up – a game similar to charades popularised by celebrity Ellen DeGeneres. Here, users can purchase additional card decks to enhance their gaming experience. This allows Houseparty to collect an undisclosed percentage of the tens of millions of dollars the game earns in both app stores every year.

In response to the COVID-19 pandemic, however, owner Epic Games then announced the full Heads Up game would be available for free.

In terms of other revenue models, Houseparty CEO Sima Sistani has expressed reservations about selling advertising on the platform. Sistani, who had previously spent time at Tumblr, saw how advertisements there disrupted the community.

Many have also speculated that Houseparty may become more integrated with Epic Games products such as Fortnite and the Unreal Engine. Some others believe integration with Spotify and Netflix is more likely.

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