how Giphy’s multimillion-dollar business went out of fashion

how Giphy’s multimillion-dollar business went out of fashion

It is rare for a multimillion dollar company to explicitly state that the business is dying because it is simply too uncool to live.

But that’s the bold strategy gif search engine Giphy has adopted with the UK’s competition regulator, which is trying to block a $400m (£352m) bid by Facebook’s owner, Meta.

In a submission to the Norwegian Competition and Markets Authority, Giphy argued that there was simply no company other than Meta that would buy it.

The valuation is down $200 million from its peak in 2016, and more importantly, the core offering is showing signs of going out of style. “There are indications of a general decline in gif usage,” the company said in its filing, “due to a general waning of user and content partner interest in gifs.

“They have fallen out of fashion as a form of content, with younger users in particular describing gifs as ‘for boomers’ and ‘cringe’.

To emphasize the point, Giphy’s archive included links to several articles and tweets.

The generation gap is real, says internet culture writer Ryan Broderick. “Gifs feel extremely dated. They were never easy to make and didn’t work particularly well on mobile.

“So now they’re basically the annoying reaction image your millennial boss uses in Slack. Instead of what they used to be, which was a decentralized image type for communication on blogs and message boards. It’s actually kind of sad how the gif turned out stifled by big corporations, copyright laws and mobile browsers.”

The animated gif is also comfortably millennial: invented in 1989, it predates not only smartphones and social media, but even the World Wide Web. It exploded in popularity with the rise of the web as the easiest way to add movement to a page, but it slowly lost ground to other ways of displaying images that required less of the limited bandwidth of the time.

The revival came in the early 2010s, along with the growth of the social network Tumblr. While gifs were never intended to replace video, faster internet connections meant they were once again the easiest way to share short clips – too short to have meaning on their own, but perfect for adding context and color to posts in the form of “reaction gif”.

Popularized by Tumblr blogs like What Should We Call Me, which compiled a perfect selection of responses to any situation, reaction gifs quickly became synonymous with the format itself. Why reply to a post with “OMG” when you can post a quick clip of Donald Glover from the sitcom Community walking into a burning room with a stack of pizza?

On top of its cultural impact, creating, posting and curating gifs could easily have become a full-time job. The best creators were known for the speed at which they could cut shareable moments from TV shows or live events on air, as well as their ability to massage the format to keep frame rates high and file sizes low.

But while the most dedicated posters kept large archives of their most used gifs, carefully sorted and tagged, for many it was a chore to track down exactly the right one to use in every situation.

That was the problem Giphy sought to solve when it was founded in 2013. As a “search engine for gifs,” the company collected more than 300,000 from around the web, tagged and categorized them, helping users find just the right one for any given situation.

“Giphy was conceived over breakfast with my partner on the project, Alex Chung, while pondering the rise of pure visual communication,” co-founder Jace Cooke said in a 2013 interview with the Daily Dot. “We both couldn’t get over how cumbersome it still was to find and share gifs, and thought we could do something about it.”

But democratizing gifs also laid the seeds of their destruction. “Whether by design or intent, Giphy’s search tool led to a noticeable monotony in gif culture,” said Brian Feldman, an internet culture writer in 2020.

“The same principles that apply to Google seem to apply to Giphy: If you’re not in the top three results, you might as well not exist. Reaction gifs became flat and less diverse.”

Technical changes compounded the problem. The same reasons why the gif died the first time were not gone: the technology produces large files with poor image quality.

Even as sites like Twitter and Facebook built-in support for posting gifs, they also modified them, turning them into video files to display them more effectively on mobile devices. That meant users couldn’t just download a gif they saw and save it for later, further flattening the available selection.

The best gifs from last year tell their own story. As Giphy grew as a business, to the point where its annual revenue is now estimated at $27.5 million by analysts GrowJo, it also ran into another problem: copyright.

The company’s response was to partner with media to host original gifs, and today nine of the top 10 gifs on the site in 2021 were posted there by the company that made them, in a cross-promotion to encourage viral contents.

Related: Georgie Carroll: the 10 funniest things I’ve ever seen (on the internet)

The #1 GIF of 2021 was a slow zoom of the character Stanley from the US version of The Office – a clip of a 15-year-old episode of a show that was old even before Giphy was founded. The second spot is a clip of Tom, of Tom and Jerry, falling asleep on a pillow; the third is from a modern source, a shot from Bake Off looking shocked. Only one, a cartoon of a happy fat duck dancing, was created by someone other than a major media partner.

Giphy even lists “the ability to retain key content partners” as a core reason for CMA to let it move forward with the Meta acquisition, arguing that a less respected owner could jeopardize those relationships.

But the gif has also outgrown Giphy. Gif keyboards in apps like WhatsApp and Twitter may not all use the service — competitors like Tenor, which was acquired by Google for an undisclosed amount in 2018, also exist — but they all have the same effect: to make it easier for people to send the quick shareable clips to each other. And yes, that includes boomers.

2021’s best gifs

1. Chain Stanley from the US office

2. Tired Tom from Tom and Jerry

3. Shocked Liam from The Great British Bake Off

4. Sad Pikachu from Pokemon

5. Agatha Harkness Winks from WandaVision

6. Peppa Pig saying “¡Feliz Cumple!” from the Spanish-language Peppa Pig.

7. The Weekend performance at the Super Bowl

8. Daphne Bridgerton laughs from Bridgerton

9. A happy dancing duck by animator Foodieg

10. Happy Baby Yoda from The Mandalorian

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