SK Communications recently carried out a corporate revamp as part of last ditch efforts to revive its flagship social networking service Cyworld, which has been hit hard by the entry of Facebook.
The Internet business unit of SK Group said Monday that it has scaled down its previous 30 business teams into 24, with a single coordinating body being set up under the leadership of new CEO Lee Joo-sik.
“We used to have different teams for different businesses like Cyworld and Nate. Now we have integrated and then categorized them again depending on their roles,” said Choi Kwang, a SK Communications spokesperson.
In order to strengthen research and development, the company said it has also established a new research center, which will be headed by Lee, who holds a Ph. D. in electronic engineering.
The company, however, denied the speculation on potential layoffs even though industry sources predict a cut in personnel of up to 30 percent.
Cyworld, launched in 1999, was one of the first social networking services in Korea and globally. And the service had long been unrivaled, securing some 33 million subscribers worldwide.
The Korean brand, however, has struggled in recent years since the arrival of the California-based Facebook.
According to consulting firm Nielsen KoreanClick, Cyworld has seen a decline in the number of monthly visitors from some 18 million late last year to 16 million in March.
Sources say many former Cyworld subscribers may have moved to Facebook, whose monthly visitors in Korea almost doubled over the past year, from 7 million to 12 million.
In August, the number of visitors to Facebook exceeded that of Cyworld for the first time, prompting disputes over the crisis with the decade-old service.
Cyworld has also yet to see big achievements in the new mobile business and overseas markets.
After a failed attempt in 2005, Cyworld announced again its global launch in seven languages last year. But the early reaction has been “disappointing,” the SK official said.
Last year, SK Communications logged 5.4 billion won ($4.7 million) in operating profits, a 78 percent decline from the previous year.
By Lee Ji-yoon (firstname.lastname@example.org)