Essay on Cyworld - Case Analysis

1644 Words Nov 18th, 2012 7 Pages
Situation Analysis

Company: SK Comms
Product line
Social networking
Biggest player
Value proposition: providing users with a free and clean community with limited advertising and an almost exclusive focus on social networking
Life cycle: mature phase of growth
Instant messaging
Biggest player
Linked to Cyworld
Social media
Media platform
Video: 50M; +50K/day
Pictures: +5M/day
Cyworld revenue segmentation (2006)
Paid items: $67M (72%)
Virtual items: $15.45M
Average price: $1
Items sold: 32M
3D virtual items: $0M
2010 projected: $(120M – 2010 paid item sales
Music: $14.48M
Selling ~200K/day
Average price: $0.50 Can be solved technically with blocking
Lack of useful
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The main springboard from which Cyworld has launched most of their successful add-ons has been its pre-established network of friends which each user has collected over the years. However, these networks, once they are acquired, become a static list of superficial relationships. Though users are currently able to chat with or broadcast to their networks, there is limited actual relationship-building. Cyworld must now step in to remedy this gap in emotional closeness by creating a way for users to engage and strengthen their network. What is the best way to create closeness?

Our initial analysis of consumer demographics, user behavior and preferences, and overall gaps in the revenue and functionality model, have led us to these possible answers to that question:

1. Restructure existing business model to shift primary revenue-driving focus to advertising, similar to social network competitors, Facebook and Myspace; and paid search competitors Naver and Google. With growth rates of 46% in 2005 and 29% in 2006, Advertising represents a thriving opportunity for Cyworld. While this option could boost Cyworld’s revenues significantly, it poses risks, considering consumer concerns with privacy and the company’s commitment to a clean and free online environment.

2. Develop a new music sales strategy to enable users to download music to personal MP3 players, following the ITunes model. Songs currently downloaded by users can only be used as

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