Jeopardy of a business model: live quiz show apps

Introduction

In late 2017, a flurry of trivia quizzing apps hit the Google Play Store. These apps came under different names: BrainBaazi, Loco, HQ Trivia among others. The one thing they had in common though was the promise of huge monetary winnings.

The timing was an interesting one as well. Demonetisation a year prior to this had made sure most people had some form of a digital wallet or a UPI, thus meaning more and more people were warming up to the idea of digital payments. The launch of Tez (which would later be called Google Pay) in August of 2017 had accelerated consumer behaviour in India in this regard.

Growth

While the nature of the show and format of questions varied from app to app, a general overview of the apps would be the following: At a set time every day the app would conduct a live quiz. A host would ask questions and options would appear on the screen. If users were able to answer all the questions, they would win a cash prize. The exact prize money received per person was determined by the total prize money divided by the number of players who got all answers correctly.

This game show format was created and pioneered by HQTrivia and its founders Colin Kroll and Rus Yusupov, two people who had also created Vine. In India, Loco and BrainBaazi were among two big apps that had been successful in getting players to try them out. A time-limit per question added an element of urgency to the game, making the format quite exciting. In late 2017, it was not uncommon to see 200 thousand players logging in to play the game every night.

I had used some of these apps for about a month or so myself. My best performance was on a day when I won approximately 300 bucks, with the total prize for the night being Rs. 1 lakh and the winners for the day being close to 320 people. Not bad for 30 minutes of fun quizzing. Some friends had won even bigger amounts.

This was a worldwide phenomenon, well summarised in an article in The Verge magazine in 2017, who wrote the following headline about HQTrivia:

(Link to the article: here)

But like all good things, a source of free money was not going to last forever.

Decline

The first few problems were functional in nature. 2 lakh people logging in at the same time put tremendous pressure on the server. Many of these apps also had an active chat section for purely aesthetic purposes, and this would often crumble on days when more users were active. Also, quite early on in their lifecycle, these apps had to think of ways to counter cheating, since many solution apps had come up on the play store that would prompt users with the answers as soon as the question appeared on the screen.

However, server capacity expansion and detecting cheating were nowhere close to being fundamental problems. That honour would go to the problem of the apps having a bad business model.

The problem was, as the apps grew more popular and more people started winning, the prize money per person began to shrink. Yes, the prize money for the shows every night were still 1 Lakh rupees, but people were now winning meagre sums of 7 and 8 rupees after having spent 30 minutes picking their brains out. The large apps could cope temporarily by increasing prize pools: Loco and HQ had VC money. Brainbaazi had funding from their parent Times Internet group. However, the smaller apps began to have user complaints regarding the low winnings. An increasing userbase was thus damaging the apps instead of helping them.

An even more pertinent problem was the apps were built around giving out money. They had no sources of revenue whatsoever. The questions, pun not intended, these apps faced were regarding whether the user was monetizable in any way? With the initial advertising being that of “a free way to win money”, most users were students and people willing to make money off the internet, not people willing to spend money on it. Thus, in-app advertising was not very likely to work either. There was no practical way for targeted advertising either, since the only info these apps had was their userbase’s phone numbers.

Peaking in the fall of 2017, most of these apps began seeing user attrition starting with early 2018, most leaving because of the low prize winnings. Most small apps had also shut shop by this period.

What happened to the larger players? Brainbaazi experimented with becoming a bingo game and changed its name to Bingobaazi, faced the same problems in the new format and shut operations in mid-2018. Loco was acquired by PocketAces (the company behind FilterCopy and Dice Media) in 2018 which in a year transformed it into an e-sports streaming platform, completely changing the app’s function.

HQTrivia limpers on, a former shadow of itself. With close to 1/10th the userbase it had in late 2017. The app has tried to earn some revenue by introducing a VIP mode where users pay to enter premium quizzes with higher prize money than usual. However, the app is yet to even come close to its former glory days.

Thus, apps that showed a lot of promise at one point very quickly turned into bad ideas. In a typical product life cycle, there are four stages: Introduction, Growth, Maturity and Decline. Most of these these apps however, jumped straight into decline from growth.

Probably content for a strategy course in the future?