Situation Analysis

Company: SK Comms
Product line
Internet
Cyworld
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
NateOn
Instant messaging
Biggest player
Linked to Cyworld
Home2
Social media
Media platform
Video: 50M; +50K/day
News:
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 …show more content…

However the streaming to MP3 process could be a complicated and costly transition given the wide range of system and compatibility requirements.

3. Develop user-specific personalized applications, product recommendations, and shopping options to encourage increased site-usage. Specifically, as the Cyworld High Frequency User ages beyond the 19-29 range, the Cyworld platform for decorating minihompys is becoming less relevant. The company needs to increase the relevance of its services by introducing specificity and targeted marketing. However this may also raise privacy concerns and dilute the previous value proposition of a clean environment.

4. Cyworld could acquire gaming companies to develop games targeted at current users. This would both increase site usage and provide users with an opportunity to further connect with contacts via a friendly and competitive venue. In addition, as users start their own families, the Cyworld gaming environment can serve as an educational and entertaining option for their children. Our answer is online gaming. While Cyworld should try to maintain the current level of sales of music and virtual items (especially with the development of 3-D virtual gifts driving revenue to $120 million in 2007) and fix the privacy glitch which forces users to register and re-register, the majority of their focus should be on gaming. Cyworld should use gaming to allow members to strengthen their preexisting