According to local reports, Cyworld has stymied operations in the market by laying off 90 per cent of its staff following a drawn-out period of disappointing fiscal returns.
The reports add that the localised Taiwanese site will not close, but the company, backed by holder SK Telecom, will no longer allocate investments to the site.
The reports add that the localised Taiwanese site will not close, but the company, backed by holder SK Telecom, will no longer allocate investments to the site.
Cyworld, a blog-based platform that allows users to create mini-homepages, launched in Taiwan in 2006. It currently has operations in South Korea, China, Japan, Taiwan and the US and plans to expand to Europe, South America and India.
The site largely garners revenue through advertising and microsite payments, which include music and digital furniture for users pages. Yet Steve Yi, a strategic planner at Grey Group in Korea, said the company may have struggled on this front over the past few years.
"Business has been declining for a lot of different reasons, and advertising may be one of them and content is absolutely another," Yi said. "The concept of Cyworld, focused on its blogging aspect, has become irrelevant. It launched as a way to make blogging easy for all users, but now we can blog anywhere easily. Cyworld needed to take that concept and evolve and expand into different areas, but it hasn't."
Yi adds that Cyworld has several competitors in the Korean market, including a community hosted by popular search engine Daum. He said Daum’s platform is more relevant to users because it combines a community aspect with its search function, making it a one-stop location for internet users.
Cyworld’s announcement comes after SK Telecom reported disappointing third-quarter results, posting a 57 per cent net profit drop from a year ago to 333.6 billion won (US$225.18 billion).
However, Cyworld has managed a few high-profile business manoeuvres that suggest the company is finally embracing change. Among these was the recent launch of its music-downloading platform, as well as its partnership with leading Korean news agency Chosun.com.
“These may help it to expand what it has to offer, but there are so many other news and music-downloading sources that I think it’ll be hard to penetrate these sectors,” said Andrew Hahn, division supervisor of digital marketing agency ITLine. “But it became popular for its homepage, so maybe its network will look these avenues and it will continue to be a strong name in the Korean market in the future.”
