hi5 Losing Global Ground to Facebook Despite Virtual Goods Efforts

2009-12-22 by EPR Staff

Hi5 Social Media

Numbers released from Alexa & Google Trends for Websites shows that Facebook is continuing to dominate, and on a global scale. The social network is popular not only in the U.S. but in several English-speaking countries in various corners of the world. Facebook has been seeking global growth for some time, and has achieved it in several places even before toppling MySpace as the number one social network on the planet. Yet one detail in particular demonstrates Facebook’s domineering qualities over other social networks, including hi5.

In some areas where hi5 was already popular, Facebook is beginning to steal market share. The result is an interesting growth pattern for Facebook as it crawls across the globe in an exponential manner. The ability for Facebook to connect users despite their geographical locale is a stated principle of the company and has been for some time.

As Facebook has overtaken every other social network in the U.S., many are looking to see if it can continue to do the same in other countries. With such rapid and worldwide adoption, it would appear that hi5 doesn’t even have a chance. Social networks such as hi5 are often considered to be second tier in the U.S., when compared to the likes of Facebook. The saving grace for social networks like hi5 is its ability to seek out corners of the global market for places to stake its claim. And now Facebook is infringing on that as well.

hi5 in particular has spent a great deal of time in the past year or so building out its virtual goods economy, integrating games and a slew of other opportunities to directly monetize its online social network. Having teamed up with a number of companies and developers for the purpose of creating content to be sold through hi5 (think full game versions), hi5 has invested a great deal into building out its virtual goods ecosystem. With Facebook still taking in some big numbers this past year, it would seem that hi5’s virtual goods efforts are for not.

One thing to consider for hi5’s global presence is the variance the company may see in its ability to localize any virtual goods efforts, based on accessibility, currency and payment options. These are all factors that could affect hi5’s ability to leverage its virtual goods market in every area in which it has a presence, or limiting its ability to expand the market with uniformity.

Facebook has also ramped up its virtual goods efforts, which had been building theoretical steam for some time. Speculation around Facebook’s virtual goods economy spurred interest in several other social networking services to take on their own initiatives towards virtual goods, including hi5’s rather aggressive strategy to better monetize its user base. Now that Facebook has launched its gift shop and has teamed up with retailers and marketers for specialized campaigns, Facebook is able to still compete with hi5’s own virtual goods efforts, despite its lessened level of involvement when compared to hi5 in particular.

While virtual goods aren’t the only aspect to running a successful online social network, it has been one of the many topics of discussion addressing the future potential of sites like Facebook, hi5 and all the others. It will be interesting to see if they can play a deciding factor in the innovation arena when it comes to online social networking, especially as others aim to steal some of their market share back from Facebook.

Everything Public Relations News Insights Author Richard D. Pace