Cyworld Pulls Out of Europe

By Cho Jin-seo
Staff Reporter

SK Communications said Friday it is closing its operation in Europe as the Cyworld online social-networking site has failed to win German Internet users.

Koreans' favorite online community's pullout from Europe casts a cloud on the overseas expansion of other Internet firms, such as Naver. It was difficult to overcome the cultural barrier in Germany where local firms began similar services and the operation costs were high, the firm said.

``The restructuring of global operations is to minimize losses from capital investment by liquidating low-profit subsidiaries,'' said Park Sang-joon, chief executive of the firm. ``(Instead) we will increase investment in markets where there is high profit and high potential.''

Cyworld is the most popular social networking Web site in Korea though there are signs of its popularity waning these days. It has pioneered since 1999, years before the better-known Facebook and MySpace appeared in the United States. Cyworld provides a small pop-up window for each user where he or she can upload photos and music to share with friends and family members.

The service has more than 20 million South Koreans as members. But the German language site, which was launched only four months ago, has seen few members signing up so there is no need to worry about users' protests at the closure, the firm's spokeswoman Shin Hee-jung said.

``This does not mean that we are folding our global operations,'' Shin said. ``We are reviewing many investment plans in many countries where we can make profits not only with Cyworld, but with various other services such as online messaging and online education.''

SK Communications spent 5.2 billion won setting up Cyworld Europe, a joint venture with Deutsche Telekom. The Korean company held a 50.2 percent share. Shin said that the emergence of Myspace's German language service was the biggest blow to Cyworld there.

The company has five other foreign operations in the form of direct subsidiaries or joint ventures. Among them, Vietnam and Taiwan have good prospects because of Korean TV stars' popularity in those countries, Shin said, while there are needs to retool its strategies in China, Japan and the United States.

While SK had considerable successes with the global expansion of Cyworld, at least in the Asian region, other Internet firms have made little impact outside Korea. Naver, the largest online portal in Korea, has been preparing a Japanese-language search service for years but the opening of the site has been postponed several times with decreasing expectations.

Daum Communications, the second largest portal, was more ambitious when it tried to make inroads into the United States by acquiring aging portal giant Lycos in 2004 for $95.4 million. But the site's performance has seen little improvement since then.

indizio@koreatimes.co.kr

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