SK Communications RAJU

7/31/2019 SK Communications RAJU

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Social Network Industry

ANALYSIS


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Why do Social Networks fail ?

Selling of data, viruses, identity theft

Example: Friendster

Privacy and security concerns

Emphasis is on quantity not quality

No value for users to share connections

Example: Linkedin

No real rewards or value

Relationships are not binary

Not enough detail

Integration with email, chat, mobile apps

Lack of integration with other apps

Utilize the value of the relationships with other services

Example: Branchout

Lack of interoperability


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Revenue models for online websites

The company gets paid for putting upadvertisements of other organizationsAdvertising

The company collects fees from the subscribersin exchange for access to content or servicesSubscription

The company charges commissions for enablingor executing a transaction

TransactionFee

The company collects revenues from sales ofgoods, information, and/or servicesSales

The company gets paid for referring people toother services/companiesAffiliate


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Porters 5 forces analysis : SNS

Industrycompetition

(high)

Potential Entrants

(Medium)

Low capital

Low product differentiation

Low IP rights

Low exit costs

Buyer Power

(High)

Low switching costs

Advertising companies

User Base

Threat of substitutes

(Medium)

New technologies

New ideas

YouTube

Google

Supplier Power

(Low)

Server providers

Apps providers


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External Environment Analysis

PEST

Technology

Increases inbroadband andinternet penetration

Decrease in bandwidthand data center costs

Economic

Greater affluenceleads to morenumber of usersonline

Social

Network effectand pressure tobelong

Political

Increasedemphasis onprivacy andsecurity


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SWOT of Cyworld

STRENGTHS

Fist moveradvantage

Strong alignment toKorean culture

WEAKNESSES

Security problem

Low flexibility inInternationalmarkets

OPPORTUNITITES

Influential Koreancontents

THREATS

Competition fromFacebook


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Cyworld

FUTURE


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CYWORLD

Still has over 20millionsubscribers

It is in the decline stage

Crucial for the company to

establish new marketstrategies to survive


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Strategic success factors

Design ease of use and attractiveness

Focus target market and activity focus

User engagement retain user minutes

User transactions innovative applications, likes, pokes etc.

Privacy

Localization

Key Business Goals

Increase advertising revenue

Increase user engagement


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CYWORLD Recommendations

Map user engagement to revenues Continuous improvement and innovation in design Increase people-to-people interaction with new features Increase applications available Increase user engagement

INTERNAL

Create young and innovative culture within the company Expand target segment and become a social network for life


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Improve Core competencies

Alliance with Nate

The wire and wireless linkage between Cyworld and Nate has a great synergy effect.

Relationship system - 1chonCyworld has the special relationship system - 1chon. Through adding the personas 1chon, accepting 1chon or cutting off 1chon, users can choose whether to maintain the relationship or not. So they put the real interpersonal relationship intothe network.

MinihompyMinihompy has many functions such as photo album, diary, board, music player,skin to express users own personality. The users can select specific groups to access specific fold to maintaining their privacy.

The blog serviceCyworld put the basic functions of mini hompy in blog and make it more simple

and clear. Also the users don t have to pay any cost or restricted by the photosize to upload photos.

Virtual currency (Dotori)The users use the virtual currency to pay for the skin, banner, ornament or music in Cyworld.


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Value chain analysis


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Industry Model for Social Media

T-Factor Question to be asked Function of

Transactions Does the transactions on your site, make adifference to the users life? Are theyrepeated?

Repeattransactions

Targeting Can the site distinguish between thepreferences, likes/dislikes of two users?

TargetedAdvertisements

and Content

Time Do your users spend time on your site?Are you an industry leader in userengagements?

User Engagement& Content

Transactions

TimeTargeting

Social media can be broken downinto the below 3 components toeffectively analyze its competiveness

It needs to be able to do all threewith varying competencies


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Recommendations

Use the user updates to deliver targetedadvertisements

Deliver local advertising based on userlocations

Monetization

Privacy concerns from Apps to beaddressed

Focus on Korean youth and become asocial hub

Application

Improvement in technology integrationbetween email, chat and mobile platforms

Solve the problem of how businesses cancontact customer looking for services in amanner that does not infringe privacy

Communications


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Long term objective

To become part of daily lifeby becoming a complete

communications tool

Bring people and businesseson the same page to

deliver services

Create an enjoyable anduseful online experience so

that user engagement grows

Documents

SK Communications RAJU