Death of a unicorn: the rise and fall of Cameo

Ever dreamed of personal recognition from your favourite singer, actor or internet personality?

Well, that’s exactly what Cameo was made for. Customers can use its online platform to purchase personalised video messages from a wide range of celebrities – requesting personal shoutouts for different occasions, such as birthdays, anniversaries, graduations or just for fun.

But things behind the scenes have been anything but fun for Cameo. While the company was thriving during the COVID-19 pandemic – reaching a valuation of over $1 billion in 2021 – it wasn’t long before the novelty began to wear off and demand for personalised videos started to dwindle.

As a result, the company laid off around 167 employees in 2022, before downsizing again the following year. Its workforce shrunk from nearly 400 to fewer than 50 and its valuation suffered, dropping by a staggering 90% after a $24 million (£19.44 million) funding round.

The state of Cameo’s business is a far cry from its glory days during the pandemic, but is declining demand really to blame for its downfall?

Market saturation

Market saturation happens when a product or service has reached its maximum potential in the market, resulting in diminished growth opportunities.

For Cameo, while it popularised the concept of personalised video messages, it wasn’t long before competitors joined the scene. Platforms like Fanmio and Memmo began attracting celebrities and users, which quickly ruptured the market and Cameo’s unique appeal started to wear off. 

Competitors also started to expand their offerings. For example, Fanmio began hosting special events and promotions across the US, including various boxing events and the Arnold Sports Festival in 2023. This created a lot of buzz around the brand, leaving Cameo losing its foothold.

Lack of celebrity engagement

Celebrities are busy (and expensive) people, and some became less available to fulfil requests due to their schedules quickly filling up, leading to delays in delivering the videos. The quality and effort put into these videos also depended on the individual celebrity’s enthusiasm and willingness to engage. This caused a lot of frustration for Cameo’s customers, some of which have reported no-shows from celebrities and poor customer service on the company’s Trustpilot reviews.

Moreover, as the entertainment industry adapted post-pandemic, many celebrities shifted their focus back to traditional work, and so just didn’t have the time for Cameo anymore. It was reported that over 10,000 celebrities joined Cameo in 2020, producing over 30,000 hours of content altogether. 

As of April 2024, this number has increased to 50,000, though given the negative Trustpilot reviews and the company’s mass layoffs, this hasn’t helped to improve user trust or customer experience.

Legal troubles

Cameo expanded its business model in 2020, including the launch of Cameo for Business, which would allow companies and brands to purchase personalised videos from celebrities for marketing purposes. It was designed to attract businesses looking to incorporate celebrity endorsements into their marketing strategies, and brands could request them to promote their services, advertise special events or use the videos for customer engagement and social media campaigns.

However, this expansion would only land the company in legal trouble. In July 2024, the company was found to have breached Federal Trade Commission (FTC) rules surrounding celebrity endorsements, which require influencers and celebrities to disclose any connections they have with brands when promoting products or services. 

Cameo was fined $600,000 (£486,000) by the FTC for failing to comply with these rules. According to a settlement agreement reported by New York Attorney General Letitia James, it was unable to pay the original fine and agreed to settle for $100,000 (£77,066). The settlement also included a provision that allowed the state of New York, plus 29 others involved, to pursue the original amount if Cameo fails to pay the $100,000 within the next three years.

New compliance measures were also imposed, including a watermark system to identify videos booked, mandatory acknowledgements from brands and celebrities regarding endorsement rules and a system to monitor compliance effectively.

Pricing issues

Celebrities could set their own fees for personalised video messages. This meant video messages could cost as little as £5 to several thousand pounds. This led to inconsistent pricing, where some users felt overcharged for videos that didn’t meet their expectations, while others questioned why certain celebrities charged so much.

For example, a user on Reddit claimed that it had cost them £90 to get a Cameo video from pop-rock band Bastille. After their request was cancelled, prices for a personalised video from the band started to rack up to nearly £300. Meanwhile, another user reported that a Cameo from American media personality Caitlyn Jenner cost $2,500 (£1,926).

Additionally, as the economy changed, particularly with inflation and the cost-of-living crisis, spending on services like Cameo became harder to justify. What was once considered a fun splurge during the pandemic began to feel less important. This, along with the perception of overpriced videos, led to a decline in repeat purchases and user engagement.

Changing consumer preferences

Customer needs and preferences are always changing and for Cameo, the novelty of personalised celebrity video messages simply wore off. In 2020, the company’s customer base grew by 250% year-on-year (YoY), while also hitting a milestone of over 2 million app downloads.

Cameo’s business model worked during the pandemic as people were looking for creative ways to celebrate and connect with others. However, as restrictions eased and traditional forms of entertainment and social interaction returned, the demand for these types of services declined. 

Moreover, customers started gravitating towards more interactive and real-time experiences on platforms like TikTok, Instagram and Twitch, where they could engage with celebrities and influencers directly – making Cameo’s pre-recorded messages feel sub-par in comparison.

The failing NFT market

Cameo made moves into the non-fungible token market (NFT) in 2021. At the time, NFTs were booming – hitting $25 billion in sales. The company ventured into this space to try and diversify its revenue streams and capitalise on the growing interest in digital collectables.

Cameo Pass was introduced as a collection of NFTs that provided fans with exclusive access to certain perks, such as celebrity meet-and-greets, private virtual events and unique content. The NFTs were marketed as membership tokens, giving holders special privileges within the Cameo ecosystem. 

The problem was that the NFT market was soon flooded with new projects in 2021 and 2022, leading to oversaturation. This meant that Cameo’s entry into the space didn’t stand out among more established NFT platforms like OpenSea or Binance. That, and the original hype surrounding NFTs began to die down. Many projects have seen a steep decline in demand and value, with 96% of NFTs now considered to be “dead” in the crypto and Web3 space.

Cameo’s story from a pandemic-era sensation to a struggling platform is a sad one but is a stark reminder of how difficult it can be to maintain momentum in changing markets. As interest in personalised video messages fizzled out and competition intensified, Cameo’s business model struggled to adapt. While it’s still operating now, its stark decline in its workforce and valuation certainly raises questions about its long term viability.