Cyworld case study(Group 9)

1. Introduction The beginning of Cyworld.

Cyworld, founded by Mr Young Joon Hyung in July 1999, is the first social networking site in the world and is developed in South Korea. Cyworld is a personal networking service that provides users with template-based homepage services and means to link then to the userd s network of friends and acquaintances. The word, e Cyf refers to e cyberf and when translated loosely in Korean, , means e relationship.f

As of September 2005, the membership figures showed that 90% of the all Koreans in their 20s and around 25% of S.Koread s population are registered with Cyworld. Furthermore, Cyworld c clicked ind networking site each month. The proliferation of Cyworld has changed the way of Koreans interacting with their friends and their Internet usage patterns. In 2003, Cyworldd s business model and healthy operations is taken over by media conglomerate SK Telecommunication, a subsidiary of SK Telecom. Simply, Cyworld is much like a virtual space in the cyber world, Internet, which sers can decorate their e homef and invite their friends. on average 20 million unique visitors to their social

<Differences between Real world and Cyworld>

<Increasing number of e Cyworldf

users>

2. The success factor of Cyworld.

1) SNS & PRP Social Network Service & Personal Resource Planning

SNS is the social network service which is, web based service focuses on building online communities of people who share interests and/or activities. Cyworld, Facebook, Myspace are the most typical examples of SNS. SNS needs three functions which are personal resource planning, Ubiquitous Sharing and Social Process. Cyworld used one of these functions which is PRP. Personal Resource Planning (PRP) is a hosted application software that allows users to control aspects of their life, both personally and workrelated. Simply, PRP is an extension of ERP, ERP is a company-wide software system used to manage and integrate all the resources, information, of a business from data stores. PRP includes all the personal resources. It provides users with tools to manage their contacts, schedules, budgets, bill and online shopping. Users access their PRP software through a web browser; ensuring access is available from any computer and/or via mobile device such as pobile phone or PDA. Cyworld adopted PRP and made their distinct PRP through e minihompyf and hit a big success.

<Differences between ERP and PRP>

2) Convenient use of Cyworld

Cyworldd s business plan is built upon the idea of creating your personal homepage or virtual home, affectionately known as e Minihompy.f This enabled Cyworld users to

not only manage their e profilef , but also their e identityf , the way they want people from both their internal and external social circle to view them. In fact, it is the minihompy that attracts its users to revisit their page frequently. This minihompy is fully customizable with wallpapers, furniture, background music etc using dotori (Acorn), Cyworldd s own virtual currency, and acts as userd s virtual home. On top of having these unique personalization options that the minihompy offers, common social networking features, such as message boards, personal photo gallery etc, are also found on Cyworld.

3) Analysis of Cyworld usersd psychology

Cyworld put usersd psychology to a good use. There are 4 analysis that Cyworld

used them to attract their minhompy. a) Self-esteem(ostentation)  According to psychology, humans have an inclination to show themselves off to others so that they can be acknowledged and wanted to be praised by others.  Cyworld aroused customerd s psychology to make them to show themselves off through minihompy. b) Self-satisfaction

Customers design their Minihompy and decorate Mini-me, because they think Minihompy and mini-me as another version of me in the cyber space.

c) Desire to steal a look  Like people want to know about the private life of celebrities, Cyworld provided an interest of stealing a look into othersd privacy through minihompy. d) Relation oriented  Members cultivate onand off-line relationships by forming buddy

relationships(Ilchon) with each other through Minihompy.

<Cyworld Minihompy>

4) e-CRM
Cyworld also used e-CRM to attract users. As you know, CRM(Customer Relation Management) consists of the processes a company uses to track and organize its contacts with its current and prospective customers. e-CRM concerns all forms of managing relationships with customers making use of IT such as Internet which is slightly different from CRM. Cyworld adopted e-CRM and have 4 stages to manage their customers. First, Cyworld acquires new customers, and then supports excellent users who are active in Internet. After that, Cyworld increases the value of customers by giving out dotori or special events and then revitalizes potential customers who are inactive in use of Cyworld. Then what are the benefits of using e-CRM? There are four benefits of using e-CRM. 1) Real Time Interaction: Using e-CRM, customers can get service right at Cyworld site through phone, chat, e.mail, collaboration or forwarding of pages back and

forth between the Representative and the Customer. Customers will have any service available twenty four hours a day, seven days a week. 2) Personalized Experience: Each and every experience between the company and the customer is personalized. Cyworld knows the person who is calling, what services or products the customer inquired about in previous interactions and what products or services may be of interest to the customer. 3) One-to-one Marketing: Cyworld uses each customer interaction as an

opportunity to reinforce brand loyalty and convert regular interaction into great experience for the customer. 4) Multi Channel Interaction: e-CRM will enable customers to communicate with Cyworlds through any available channel like phone, web, VOIP, e.mail, text based collaboration, video etc.

5) Cyworldd s Profit Model a) Revenue Source - Acorns(dotori)

Last year, SK Communications ha Half of that revenue an from selling a majority of the profit came from Cyworl . An sales of $160 million an

70% of that profit is

otori. rive the Cyworl

First, what calle

business is the sales of their virtual currency

e Dotorif

or e Acornf . Acorns are use

to purchase e itemsf

of the minihompy. Currently for USD$1, you can get about 10 Acorns an price for e itemsf backgroun range from aroun aroun

2 Acorns to for a wall painting, 6 Acorns for a for a fully furnishe

music an

20 Acorns spen

room. On average,

users aroun

20-25 years ol

about 500 Acorns a of using

ay to

ecorate their c virtual

homes. Then why not use actual money instea By using Acorns, it minimizes users

otori?

repulsion for paying for

igital items. For

example, if you use real money to buy those

ecorations, you might feel it is wasteful.

However, by using virtual money which is Acorn, users feel less wasteful an buy them.

profit $25 million.

for the furnishing the market

worthy to

<Cyworld Acorn(dotori)>

<Mobile Cyworld>

b) Revenue Source

Mobile Service

Cyworld is also increasingly bringing in revenue from mobile services. There are 2.6 million customers who have signed up to access Cyworld via cell phone for free, paying only upload charges. And they do: 90 percent of all images uploaded in Korea go to Cyworld. SK Telecom has announced that user number of e Mobile Cyworld f users has (0.14

exceeded 1 million, being far ahead of other mobile services like Mobile Daum Caf

million) or Mobile Naver Blog (0.1 million). At the same time the average monthly page view of mobile CyWorld is 350 million which results in the fact that on average a user visits mobile CyWorld eleven times a day or basically once an hour. 65% of the users are female and 50% of the users are between 19-25 years old. Besides writing messages to their friends d e Minihompy f , sending pictures which

have been taken by mobile to their own e Minihompy f . Over a million photos are sent like that monthly resulting in nice data related revenue for SK Telecom. These are usage patterns other MNOs and service providers dream of. `value to the customer experience. At the same time it is combined with adequate pricing, e.g. it has a flatrate for usage of mobile CyWorld being very attractive to the younger target group.

6) Synergy Effect with Nate-on

Cyworld M&A with SK Communications providing the messenger Service which is called NateOn. This greatly increases accessibility to the users and NateOn informs the updates

of minihompy on real-time which locks in their customers and increases entering barrier. If you look at the graph below, you can see that after merging with SK Communications the number of users has greatly increased.

<Increasing number of users after merging with SK Comms>

<Increasing number of users after merging with SK Comms(NateOn)>

3. Global Cyworld.
Some security issues that have surfaced thus far is that, currently, only those with a Korean social security number are able to create a minihompy on Cyworldd s Korea server. The main issue is the concern with a difference in user experience between Cyworld Korean and Cyworld everywhere else in the world. This experience is the ability to engage in the purchase of a wide variety of digital goods available on the Korean server and the level of modification left for the user is reduced. Despite this flaw, with its well-established SNS business and its flaming success, Cyworld decided that it needs to expand its operations beyond Korea and started their move into United States, China Japan, Taiwan, Vietnam and Germany.