Clubhouse Fights to Retain Share in Now-Competitive Market

The social audio boom that grew out of COVID-19 lockdowns has resulted in a reshuffling of players in the chat app space, as Clubhouse fights to maintain its once-dominant market share against competition from newer entries like Twitter Spaces, Spotify Greenroom and Facebook audio chat. Discord and platforms focused on gaming and NFTs also offer audio conversation features, and Amazon is reportedly working on a similar feature. Founded in 2020, Clubhouse initially had only Discord to contend with, resulting in early growth and a funding round valued at $4 billion.

The New York Times recounts how the app started the year with a booming 9.6 million downloads in February, falling to 2.7 million in March then 917,000 in April, according to Sensor Tower. During that time, Twitter was energetically expanding Spaces, which it started testing in October 2020, opening to more users in the spring.

“By May, Spaces had more than one million users,” NYT reports, illustrating the market’s rapid shift. Clubhouse fought back, dropping its “invitation only” prerequisite, launching a version for Android and expanding internationally, in India, Brazil and Japan.

By June, Sensor Tower reports Clubhouse was back up to 7 million downloads (although the company tells NYT the number was actually more than 10 million). “Still, some Clubhouse users complained that the app was no longer frequented by celebrities and business leaders, and that the conversations that remained were less interesting,” NYT writes.

But now that the hype, captive audience and easy money have subsided, Clubhouse co-founder and CEO Paul Davison, says the company is focusing on different, but still abundant, opportunities presented by the new market conditions.

“Clubhouse is becoming a platform for people listening on the go,” Davison, a former Google intern, told CNBC: “From commuting, going to the gym, folding laundry at home, people are tuning in to hear Oprah recap her interview with Adele or learn about what’s going on with NFTs. Clubhouse is another complement to our real-world behavior, similar to how people aren’t going to stop using dating apps because bars are open or stop shopping on Amazon because they can go to stores.”

Meanwhile, NYT reports that Twitter Spaces will close the year with about 2 million users, and Clubhouse “is still growing.” The company, which does not publicly report user numbers, told NYT that “about 700,000 conversations — known as rooms on the app — are created every day on Clubhouse, up from about 300,000 this summer, and that the average user spends about 70 minutes a day on the app.”

The Clubhouse app had 1.8 million downloads in November, a spokeswoman told NYT, adding that the company expected to exceed that figure in December.

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