1. Introduction 1.1 Background Ever since the so-called “eve” networks of Internet founded in 1969 (http://www.livinginternet.com accessed on 11.05.10), till now in the 21th century, the new era of Internet surfing, people‟s life has become not only material but cyber. The social networking sites, as a new online practice since late 1990s, has gained noticeable popularity among Netizens. The social networking sites have been penetrating into people‟s daily life. Create a profile on a social networking site, make friends, and tell the others what you are doing at the moment, all these have become a new lifestyle of people today, especially young people. Moreover, it has become a new multimedia platform for users sharing their own lives with other people. To some extent, this innovative network form has propelled the online life more global and interactive. Mintel report (2009, p. 5) finds out that the UK has led “in terms of social networking amongst other developed nations”. Data from Ofcom‟s “social networking” research (2009) reveal that the UK adults‟ sign-up to social networking sites have almost doubled during 2007 and 2008, from 22% to 38%. However, on the other hand, the “social networking phenomenon” has catalyzed vehement discussion concerning online life today. Issues with privacy, time wasting, also internet abuse have become new topics on which researchers shift their focus. 1.2 Objectives This report sheds light the current status of social networking sites industry. Through analyses of industry in the UK market, the report also tries to forecast the future development of the industry. The objectives of the report are as follows, to probe the industry‟s remote environment by use of a PEST analysis tool; to analyze the industry structure and competition intensity using Porter‟s five forces; to make utility of the latest information to predict the development in the future as this industry is evolving fast and quite new with high technology involved. 1
2. Overview of Competitors in the arena
DIAGRAM 1: TOP 10 SOCIAL NETWORKING SITES BY TOTAL UK UNIQUE VISITORS, MAY 2009 property Visitors, May 2008 (000) Visitors, May 2009 (000) Change (%) Total UK Online Audience Penetration, May 2009 (%) 100.0
Total UK Internet
27,118 29,444 9 79.89 Total U.K. social networking audience Facebook 15,195 23,860 57 64.74 Bebo 11,895 8,546 -28 23.19 Windows Live N/A 6,891 N/A 18.70 Profile MySpace.com 8,335 6,531 -22 17.72 Twitter 80 2,670 3,226 7.24 Digg 1,311 1,759 34 4.77 Friends Reunited 3,271 1,629 -50 4.42 Tagged 669 1,625 143 4.41 deviantART 900 1,453 61 3.94 Buzznet 939 1,370 46 3.72 Note: Audience includes U.K. Internet users, ages 15 and older, at home and work. It excludes Internet activity from public computers, such as Internet cafes, and access from mobile phones or PDAs.
Source: comeScore, 2009
Marshall on ClickZ (2009) has given a list of top 10 UK social networking sites, shown in Diagram 1. The survey found out “eighty percent of the total UK online population visited a social networking site in May”, and that the practice has become “the second most popular online activity in the UK” during May 2009, with an average time spent 4.6 hours per user. The top four sharing the largest market share are chosen as main competitors in the arena, namely Facebook, Bebo, Windows Live Profile, and MySpace.com. Marshall‟s report also shows us the penetration percentage of the UK online population of the top four competitors: Facebook 65% Bebo 23% 2
Windows Live Profile 19% MySpace 18%
Facebook Facebook was launched in February 4th, 2004. As shown in 2005 ZDNet Research (2006), this brand did not even appear in the top 10 list at that time. However, it has gained popularity dramatically during no more than 3 years, and has continued to hold a title for over 4 years (Mintel, 2009; TopTenReviews, 2010). Bebo Although Bebo ranked the top two, it only managed to...