Skype blew a 3-1 lead. Years ago, the company name was synonymous with the video call. You weren’t “video chatting” someone, you were “Skyping” them. But in the years since, Skype has fallen from grace and become synonymous with antiquated social technologies like AOL Instant Messenger and MySpace. Not only has their crown been claimed - it’s been fractured. Skype, once a catch all for a number of different audio and video chat uses, now has a major competitor eating up every possible use for the app, leaving them old and in the dust. So what happened?
Launched in 2003, it wasn’t long before Skype became an internet staple and every tech company of the era started clawing at the door. Two years after launch, eBay ($EBAY) acquired the company for $2.6 billion. Over the next six years, it would be subject to two more major billion dollar acquisitions, ultimately ending up with Microsoft taking control of the company for $8.5 billion in 2011. Skype was at its peak popularity then, but already a threat was creeping around the corner.
The year before that it was acquired by Microsoft, the first app that would be the undoing of Skype entered the market. Facetime, Apple’s ($AAPL) proprietary video call software for iOS devices, landed with a splash, and when the ability to communicate between iOS devices and Mac computers was added a year later, its immediate usefulness immediately eclipsed Skype’s computer-to-computer connections.
Almost immediately “Facetiming” became the catch-all term for casual video conversations, and still is to this day. Skype did end up releasing an app that allowed for connections between phones and computers, but their user interface required (and still requires) multiple steps to add someone to your contact list. It was too little too late for Skype to play catch up. For the time being, Skype may have lost the large casual call market, but it at least still had a solid footing for business and gaming calls.
That is, until Discord ($BLOCKCHAIN:DISCORDAPP) came along. First released in 2015, Discord is a messaging app that does video and audio calls, text messaging, and more. But with some clever branding and purposeful design, the app has rocketed to a $3.5 billion valuation and asserted a complete chokehold on not just gaming communities, but internet communities at large.
On an extreme surface level, Skype can do everything that Discord can. But those same functions are organized and communicated by Discord in such a way that makes it an app specifically for communities. Whereas Skype only allows peer-to-peer chats or group chats, Discord allows users to create entire servers dedicated to specific topics, events, games, fandoms and communities in general.
Any given Discord server has an enormous range of customization options, allowing users to create digital lived-in space for themselves and their communities. Just about any Twitch streamer you could find has their own Discord server, as do many podcasts and websites - it is simply the best place to curate and grow a community.
Discord appeared on the scene at the perfect time, coinciding with the slow end of the web forum as sites like Digg, Reddit and Twitter became the go-to platforms for group discussions. Discord’s creators initially pitched the app to various popular subreddits, trying to offer them a place to commune outside of the website. Crucially, Discord’s branding used the language of online communities as a way to signal to them that they were welcome on the platform.
With Discord gobbling up Skype’s limited usefulness for community gatherings, all Skype had left was its professional appeal. But even that had been under constant attack, and would soon be ripped away from them. Cisco ($CSCO) has long been a top competitor in the professional conference call space, and Skype’s angle was immediate peer-to-peer use.
Then, along came Slack ($WORK) and Zoom ($ZM) to pick what meat was left off the bones. Slack was released in 2013 and was something of a slow burn, but today is so ubiquitous with workplace communication that it needs no introduction. While its primary function is as a workplace messaging app, Slack took extra blows at Skype by introducing voice and video call features, making it a one-stop shop for any work communication needed.
But perhaps the most striking nail in the coffin for Skype has been the rise of Zoom. Mostly unheard of before the pandemic began, Zoom is now as ubiquitous to the workplace as Slack. But Zoom’s usefulness extends beyond conference calls. As the world longed for social interaction during quarantine, “Zoom” became the term for any gathering outside of work hours done over video call. “Zoom” happy hours, “Zoom” yoga, “Zoom” trivia, even “Zoom” therapy have all become part of our regular lexicon. Even school is being taught over Zoom, ensuring that the brand name will become familiar to children at a very young age.
Meanwhile, Skype sits in a throne of ash, quietly providing its service to those who need it, but unable to overcome the highs of the new and younger competitors who continue to rise. Twitter followers paint a clear picture of Skype as a king in decline, rapidly ceding space to its hungry competition and unable to bail out enough water to stay at the top. Since 2019, Skype has lost nearly 200,000 followers and continues to slowly shed influence.
Meanwhile Zoom and Discord have had blockbuster years thanks to their well-established presence as a workplace necessity and social escape respectively. Zoom’s following has grown by 20% since January while Discord’s has grown by 23%, adding nearly 420,000 new followers.
In the end, Skype’s downfall emphasizes the importance of aggressive branding and keeping up with competition. It’s not enough to sit comfortably with a strong reputation as a player in a space with as much competition and innovation as tech communications - brands need to constantly reinforce their presence and present themselves as approachable to users. Skype was also simply unable to keep up with the rate of innovation happening at every angle, and unable to foresee the demand for certain use cases before it was too late.