Even as Facebook fever grips investors proir of the social networking giant’s potential $ 100 billion-plus initial public offering, it is breakneck growth in Asia may be slowing as it mobiles beyond desktop users to those who access the Internet all of region or overly from mobile phones.
In March, Facebook revised it is own Securities as well as Exchange Commission filings to scale back it is scope for further growth in India — it is third-biggest user base as well as the largest population it today has access to — China remains off-limits to Facebook. And independent data present that user numbers in Indonesia as well as the Philippines, it is several several other largest Asia user bases, have certainly fallen off rather in the past three months.
“If you have been growing at such that a huge numeral it is about to certainly trail off,” stated Ganesh Kumar Bangah, Kuala Lumpur-based CEO of overline payment provider MOL Global. “You cannot expect it to keep growing.”
While there are concerns that Facebook has yet to prove a reliable revenue model for advertisers, the company says it is strategy remains focused over adding users, regionicularly in regions such that as Asia.
In this it has all of region been successful. Since it is authentic filing in February, concording to it is own data, it has sum up 56 million users, goes along with the largest growth in Asia. And goes along with a couple ofer Facebook users per capita than all several several other region but Africa, there appear to bes to be plenty of room to add more.
Asian Growth
Much of this growth has get from from dislodging incumbent social networks, overtaking Google’s [GOOG
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] Orkut in it is remaining powerfulholds of India as well as Brazil, as well as surpassing domestic stalwart Mixi in Japan as well as gaining over Cyworld in South Korea.
Some of these successes have get from from deliberate strategies to win over primaryly mobile user bases. In Japan, for instance, the number of Facebook users has closely doubled in the past 5 months. Data from Nielsen Japan present that by the middle of last year Facebook overtook Mixi, that lost 2 million regular users over 2011.
The battle was a difficult overe. Facebook opened it is first engineering office outside Silicon Valley in Japan 2 years ago. It created a mobile site that worked well over Japanese phones as well as built bridges goes along with local developers, stated Serkan Toto, a Tokyo-based consultant over Japan’s mobile web as well as gaming industry.
Facebook’s popularity in Japan was asides driven by a surge in smartphone usage, that closely tripled in moreless than a year, concording to Google data. The tsunami as well as afterwardsmath asides pushed users to embrace social media to share freshs as well as photos.
“All these technologies need a trigger,” stated Napoleon Biggs, Asia head of digital for PR as well as marketing firm Fleishman-Hillard as well as ascertaineder of a social media community in Hong Kong.
Whether Facebook has room to grow so over in Japan, nevertheless, is a matter for debate.
“Mixi maxed out at 15 percent of Internet users, several nevertheless in the U.S. Facebook has reached more than 60 percent,” stated Toto, “so it depends that benchmark you take.” The just likelihood, he stated, is that although Mixi was all of region limited to students as well as 20somethings, Facebook is about to be able to appeal to older users.
Others disagree: “There sawms to be a limit of 20 to 30 million users in Japan,” stated Tokyo-based blogger Akky Akimoto, “although the Internet population is over 80 million.”
Korea has concorded a severalwhat similar trajectory. While Koreans had long time been utilized to social networks, Facebook need time to gain traction, as well as although adding 2.5 million users in the past six months, still overly accounts for moreless than 15 percent of the population.
Some of Korea’s growth is downward to celebrities being persuaded to adopt the platform. In the past week, overe of the all of popular global sites over Facebook has been that of Kim Hyung Joong, a K-pop star who was overe of the first celebrities to join, concording to Tae Woo Kim, a software developer in Seoul.
Much of the growth was driven by the arrival of Apple’s [AAPL
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] iPhone in 2010, stated Kim. “When they bought a smartphone, they did not’t acknowledge what to install, although Facebook was overe of the options,” he stated.
Local Attraction
But Facebook’s chances of moving so over depend over it is ability to not just localize the interface several nevertheless encourage local language applications.
“A critical factor in Facebook’s success is going to be their ability to localize the service, not just overly translating allthing into Korean several nevertheless by satisfying local preferences for content,” stated James Larson, a visiting professor at the Korea Advanced Institute of Science as well as Technology.
This is asides true in India. Facebook has launched versions of it is web site in numerous local languages as well as mobile versions, demonstrating it is seriousness of purpose. But just how many potential users are there out there among India’s 1.2 billion population?
In it is authentic SEC filing, Facebook lumped India bring together goes along with Brazil as well as Germany as countries where the service had penetrated overly 20 percent to 30 percent of the Internet population. But when it revised it is filing a a couple of weeks later it had positioned India alongside Britain as well as the U.S. goes along with estimated penetration rates of 60 percent.
Part of this jump can be put downward to growth: Facebook says the number of users who logged over at in the least when a month — what it calls monthly active users — more than doubled over the year to March to 51 million. But by acknowledging it’s already reached the similar level of penetration as it is all of mature markets it’s asides recognizing that there is a limit over how many more users it can acquire in it is biggest accessible market.
“There are important limits to the number of users Facebook can get in India,” stated Nikhil Pahwa, editor of MediaNama, a Delhi-based publication covering digital media.
Part of this is downward to the obvious problems of access. India has been slow to deploy 3G networks. The result is that a lot of people are accessing Facebook over basic phones over slow networks. Dina Mehta, a researcher, recalled meeting a scrawny 13-year-old in a Mumbai slum who was surfing Facebook over a dilapidated phone over a prepaid package that gave him three days Internet access for 14 rupees (25 cents).
It asides raises a bigger issue: With so many people accessing Facebook from a range of mobile devices over connections of varying quality, how does the company create the service compelling decent to keep them engaged?
“One of the very specific requirements in India is how to replicate the rich interaction experience of the large screen,” stated Rajesh Lalwani, Delhi-based CEO of Internet consulting firm Blogworks. “That’s going to be a very important question for Facebook to answer, regionicularly in India where the mobile population is large as well as usage is increasing faster than web usage.”
Social Time
Indeed this is region of a bigger problem.
For Facebook to keep users interested, as well as to ascertain methods to monetize it is service in Asia, it requirements to create the service sticky. Right now, it’s not: Data from web analytics firm comScore lists Asians as spending the in the least numeral of time over social networking sites in the world — around three hours in a month, furthermorest a global average of about twice that, as well as compared to Latin Americans, who spend up to 8 hours a month. Although Asia Pacific is house to the largest social networking population by visitors, the region accounted for just 16.5 percent of all social networking minutes, concording to the report published in September.
This may not yet be a pressing issue in India where usage is rising. But any several other place in Asia, where Facebook has been popular for numerous years, there are inklings of fatigue — regionicularly where mobile Internet connections are slow.
According to socialbakers.com, a web site that compiles data over Facebook users, the number of registered users in Indonesia, the Philippines, as well as Malaysia has fallen rather in the past three months. Although the percentage fall is modest, the drop-off accounts for closely 1.5 million users in Southeast Asia — this from a region conceiveed to be Facebook’s major growth area.
Although such that figures are unofficial, as well as by no implys signify that users are abandoning Facebook, they suggest the company cannot assume continued growth in the region. Indonesia now has more than 42 million users, that accounts for more than 17 percent of the population, several nevertheless is more than the estimated number of Internet users in the country. The similar is true of the Philippines.
Less time spent overline asides implys lower revenues.
“The importance of Asia to Facebook is huge; it has the largest population, several nevertheless it is actual financial importance is littleer,” stated Thomas Crampton, Ogilvy & Mather Asia-Pacific director for social media. “A U.S. user is closely 10 times more valuable.”
Ads as well as Apps
One reason ad revenue is low in Asia, stated Fleishman-Hillard’s Biggs, is that it’s overly nowly that Facebook has put teams in place to sell ads straightly.
“That’s been a huge boost,” he stated. Now, he stated, the challenge is to educate ad buyers as well as for the Facebook team it iself to stay over the best of the changes that the company introduces to the ad formats available.
Still, the more mature Facebook markets of Southeast Asia have already started exploring methods to create the service more appealing as well as asides to ascertain methods of making money from it.
Mitch Padua of Smart Communications stated the Philippine operator is today exploring admiting it is billing cognitive system to be utilized to buy Facebook credits that can and then be utilized in games as well as several several other applications via the mobile phone.
“They’ve figured out that operator billing is the overly method to reach the end-user as well as where Facebook as well as telcos can share user revenue,” he stated.
And in Malaysia, MOL has been a Facebook regionner since 2010 developing the infrastructure for microtransactions, revolving around buying prepaid cards that can be converted to Facebook credits. And it’s this, MOL’s CEO Ganesh stated, that represents the future for Facebook in Asia. He points to Facebook’s now launch of it is App Center where users can downwardload as well as install apps goes along inside Facebook’s ecosystem.
“Online the money is not coming from ads several nevertheless from apps,” he stated. “If Facebook can channel the users to buy apps it may get a important region of their revenue.”
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