Houseparty, the group video-chat app that grew popular during the Covid-19 pandemic, is shutting down in October, the company said Thursday.

The app, acquired by “Fortnite” maker Epic Games Inc. in 2019, will be removed from app stores immediately, said Houseparty, formally known as Life on Air Inc. It will continue to work for users who already have the app until it is discontinued next month.

The team that developed Houseparty will be working on other products for Epic Games, “in a more rich form than 2D video—one that is better positioned to shape the next generation,” said Houseparty co-founder and chief executive Sima Sistani, in a series of tweets Thursday.

The company said the additional projects mean it “can’t give the app or our community the attention it deserves.”

A spokesperson from Epic Games declined to comment beyond statements from the Houseparty team.

Houseparty became a buzzy startup after its app launched in 2016 because of its popularity among teens and young adults—a demographic different from typical users of Silicon Valley companies such as Facebook Inc., which had launched a competitor that it later shut down. Houseparty had raised more than $70 million in venture capital before Epic Games acquired it. Under Epic Games, Houseparty offered users a way to stream their “Fortnite” games on the app for friends to view. The function will no longer be available when the app shuts down.

Houseparty had 102.6 million total first-time downloads globally on app stores from Apple Inc. and Alphabet Inc.’s Google through August 2021, according to Sensor Tower Inc. Houseparty’s best month was April 2020, with about 19.8 million new installations. Monthly downloads this year have fallen far from that peak, with 1.2 million first-time installations world-wide in April and 642,000 in June, according to Sensor Tower.

Part of the app’s goal was to create avenues for users to engage in real-time conversation, rather than reacting to posts on social media, said Ms. Sistani at The Wall Street Journal’s 2019 Future of Everything Festival. “What we’re trying to bring is the humanity back into connecting,” she said at the time.

Houseparty added more older users during the pandemic as parents who were stuck at home with a younger generation began to invade the app.

Write to Jennifer Calfas at Jennifer.Calfas@wsj.com