|The mobile messenger Kakao Talk by South Korean firm Kakao|
South Korea’s biggest portal site, Naver, recently decided to shut down its microblogging service Me2day in June of 2014, saying it will focus on strengthening its core competitiveness against big foreign rivals.
In some respects, it has humbly admitted defeat, unable to compete with U.S. social media giants like Facebook and Twitter, which have gradually expanded their clout in Korea.
Facebook revealed in July that it has about 11 million monthly active users in South Korea, 6.8 million of whom access Facebook at least once a day. According to The Hankyoreh, the number of Twitter users in the country was estimated at 7.21 million as of August.
As global titans advanced onto Korean soil, major domestic social media sites went on the defensive, closing down their services. For instance, SK Communications’ C-Log, KTH’s Pudding.to and I’m IN, and Daum’s yozm all terminated their services.
Experts said the first-mover advantage is one of the main reasons domestic SNS companies struggle against global IT firms.
“In the case of online services, when a certain concept of a service penetrates the users’ minds, it is unlikely the users will switch to other companies,” said Lee Byung-oc, chairman of the Korea Social Network Association. Lee said that the likes of Me2day and C-Log are largely imitators of Twitter, without distinct characteristics.
Although Me2day’s popularity in Korea grew to threaten that of Twitter at one point, it saw its popularity quickly diminish. Lee explained that the service’s downfall stemmed from its demographics: the users were mostly composed of teens, a group unlikely to have much purchasing power or remain loyal to one company.
Ahn Byung-ik, CEO of location-based SNS Seeon, said that people are more likely to join already-successful SNS. This is due to the “network effect,” a theory which claims that once demand for a particular product is created, it affects the demand for and purchases of other products as well.
In the past, South Korea did have dominant SNS of its own. SK Communications’ Cyworld once boasted 35 million subscribers and offered enviable services. Cyworld had virtually no competition up to the mid-2000s.
It was also one of the earliest services to adopt what might be deemed today as social commerce, with its “dotori” tokens acting as a virtual currency within the SNS.
Lee said that the success of Cyworld depends on its closed-circuit system, which allows users to interact largely with those whom they already know. This, according to Lee, was in keeping with the online trend of the time, hanging around with friends rather than reaching out to strangers on the Web.
Cyworld’s immense success eventually became a curse, as the service had grown too big to adapt to the worldwide wave of changes jumpstarted by Facebook and Twitter. In contrast to Cyworld’s closed system, the U.S. social media giants pushed for more open networks.
Another factor was that while major SNS target worldwide users, Cyworld relied heavily on its local users, failing to turn its potentially promising service model into a global one.
Last month, SK Communications decided to spin off the once-prominent Cyworld. The service has about 27 million registered users, though the proportion of active members is far smaller than the total figure.
Myung Seung-un, head of Venture Square, said the downfall of Cyworld was “foreseen” when hackers stole data of its 35 million users in 2011.
“With no innovation, no business value and no security, it is hard to think that the service will last for very long,” Myung said.
In contrast to the steep ups and downs of Cyworld, local venture company Kakao showed that size does not decide everything in the turbulent SNS market. Kakao was one of the first companies to provide an instant messenger service for smartphones, and Kakao Talk service grew rapidly to become a dominant player here.
As of December last year, Kakao Talk has some 125 million users worldwide and although it did not announce the official tally of domestic users, some 35 million South Koreans are estimated to use Kakao Talk on a regular basis.
Kakao is seen as a successful case of a domestic firm introducing a differentiated service, rather than engaging in an uphill battle against established players. In the wake of Kakao’s success, other local firms are looking to follow suit with new services tailored to Korean users.
A location-based SNS firm, Seeon, provides apps that allow to users to share information about their favorite stores while providing custom-fit data based on location and needs. The so-called “vertical SNS,” which focuses on a single aspect of social networking, is still a relatively new business.
According to Ahn Byung-ik, vertical SNS has huge potential once combined with e-commerce. As more users begin using SNS, the social commerce market can also grow.
Ahn warned that if such services fail to secure a foothold in competition with foreign giants, Korean firms will not only lose a share of the SNS market but also of the e-commerce market that depends on such services.
As with Seeon, the social media of the future is expected to evolve around content rather than simple relationship-building.
According to Lee Byung-oc, new social media services will focus more on “social curation,” putting together sets of useful pieces of information that can be better distributed on online and mobile platforms. “It reaches beyond the simple concept of relationships between people. It will provide measures for sharing information and expressing one’s needs within the boundaries of the online relationship,” he said.
By Yoon Min-sik (email@example.com)