TECH TALK: Cyworld: Success

Alan Moore of Communities Dominate Brands talked to Benjamin Joffe of Plus Eight Star Ltd, who outlined the early days and key success factors for Cyworld:

According to its founder Young Joon HYUNG, Cyworld’s success is the resul of a combination of factors which allowed his vision to come true. This vision was a development on concepts such as the “six degrees of separation” and an adaptation to the individual of ERP concept (Enterprise Resource Planning). Cyworld’s founder called it ‘PRP’ for ‘Personal Resources Planner’, which he developed during his PhD Thesis on ‘trust-based information sharing’ at KAIST, South Korea’s MIT, in 1999.

This was the founding concept, which could be implemented because of:
1). Korea’s highly advanced broadband infrastructure
2). Meeting with a perfect timing with the digital camera boom in Korea in 2002
3). Persistence until broadband penetration in households reached 60%

Other experts we interviewed mentioned the importance of:
1). Introduction of cybercash (‘dottori’ or acorns) with a large array of payment methods
2). Paradigm shift from the advertising-reliant online services
3). Shift from mass community to personal community
4). Buy-out by SK Communications, which boosted both marketing and technical infrastructure

Business Week had this to say about Cyworld in a September 2005 article:

One feature that has helped Cyworld take off is “wave riding.” It works like this: When you’re reading posts on bulletin boards or looking at photo files, you can click on the name of someone who has added a remark or photo you find interesting and you’ll be transported to that person’s digital room. If you like the art or music, you can introduce yourself and put in a request to become a “cybuddy.” If accepted, you can use your buddy’s goodies — from art to photos — on your own page. The chain of wave-riding visits creates communities on the Net, which often develop into clubs of common interest in the real world: clubs for fishing, bike riding, and going to jazz performances, among others.

Letting users post as many photos as they want is another big draw. The growing popularity of digital cameras and camera phones means youngsters increasingly use digital images to share experiences or express themselves. An average of 6.2 million photos are uploaded to Cyworld each day, many of them directly from cell phones. “I use Cyworld as the photo archive for my family,” says Kim Joon, a 31-year-old software engineer who met his wife through a Cyworld club for virtual “families” in which he first played her husband. “My 1-year-old son will have a photo log of his life in Cyworld 20 years later.”

Business 2.0 wrote about the personalisation and virtual currency aspects in Cyworld in July 2006:

As Cyworld gathered a critical mass of users, it discovered a new business model. Using the site was free; personalizing it was not. If you wanted to decorate your mini-homepage, you could choose from tens of thousands of digital items – homepage skins, background music, pixelated furniture, virtual appliances. But you had to pay for them with “dotori,” or acorns, and you had to buy the acorns with real money.

The virtual goods were cheap – typically less than $1 apiece – and consumers had no problem paying for them. A well-appointed mini-homepage reflected your social standing, and users who did not decorate were considered boring.

This year Cyworld expects to make $140 million in sales, with acorns accounting for 70 percent of that. That means Korean consumers will shell out more than $100 million this year for Cyworld’s virtual inventory. Most of the rest its sales comes from mobile services, where customers pay to upload photos (90 percent of all images uploaded in Korea go to Cyworld).

Tomorrow: Success (continued)


Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.