Cyworld Lands on Myspace

Since last year, Myspace, which was bought by News Corporation at the time for $580 million, has seen phenomenal growth. It has more than tripled its number of unique visitors to 38 million while seeing its total number of registered users rise past 70 million in the last quarter. Its net income is expected to reach $50 million by next year.

The latest company setting its sights on the Myspace market has recently opened a test site for the U.S. market but it is no newcomer. Cyworldâs social-networks are already known in East Asia, with an especially strong base of 18 million users in its home country of South Korea. Riding that success, Cyworld is expanding operations worldwide. Among its targets is the United States this August.

While Myspace is currently atop the social networking heap, Cyworld comes with seven years experience and backing from SK Communications, a subsidiary of South Koreaâs largest wireless operator SK Telecom.

Capturing the Market

Cyworld was founded in 1999 by four graduates of the Korea Advanced Institute of Science and Technology, the South Korean equivalent of MIT. The site was hardly an overnight success. However since that time, Cyworld has grown to become a dominant service, especially among South Koreans in their late teens and twenties.

SK Communications bought Cyworld for $8.5 million in 2003. In 2005, Cyworld accounted for nearly half of the company's $160 million in sales and most of its $25 million profit. This year, Cyworld expects to generate over $140 million in sales.

With the formal launch of Cyworld in the United States, SK Communications aims to secure a foothold in the worldâs biggest Internet market. In June of last year, the service expanded to China, where it has reached nearly 2 million users. It also opened up a Japanese site in December and plans to launch a service in Taiwan on August 24.

Time is Ripe

Cyworld has seen so much success in South Korea it is beginning to saturate its own market. While it has nearly half of the nationâs 49 million people, the number of monthly unique visitors to Cyworld fell slightly to 21.17 million in June compared with 21.75 million the in May. In contrast, by this April, unique visitors to Myspace grew by 30 million from 8 million last year.