Is Facebook in trouble – part 2. No, it’s not.

by Lee Hopkins on May 15, 2010 · 3 comments

in clippings

I earlier took up the points raised by Oli Young about how Facebook is falling foul of its users through its bizarre privacy shufflings.

To be sure, Facebook have done some serious ‘shoot own foot’ manoeuvrings these last few years when it comes to facebook user privacy. I totally agree that there are any number of serious commentators out there (Jeff Jarvis is one of the latest commentators wishing facebook were smarter and had less hubris); I am currently reading an academic paper [pdf] from 2008 written by danah boyd that talks about facebook’s privacy/newsfeed issues from 2006.

But two of the reasons I don’t think that users are going to run screaming from facebook in a hurry are:

  1. there’s no competition out there
  2. the games – mafia wars, farmville, cafe world, et al – are so sticky that a competitive site to facebook would have to offer the porting across of accumulated treasure, points, profiles, etc., for it to make sense for a gamer to move

Now it seems that the stats are bearing me out. Although this is nearly a fortnight old (sorry, I’ve been a bit slow on this one), Neilsen Online are tracking Facebook and Twitter growth at 69% and 45% respectively in the massive US market.

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Over to you, Oli :-)

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  • http://twitter.com/oliyoung Oli Young

    1. Completely agree that there is no viable competitor to Facebook right now (if NewsCorp were clever they'd start driving MySpace onto the radar, but they won't), there are potential competitors on the horizon, but on of the wonderful things about the online space is that the application that's going to kill yours could launch tomorrow – and you don't know it yet. I'm still of the belief that this quarter, will see Facebook's growth start to signficantly stall and the focus on the alternatives like Disapora (which raised over $100k in open donations in the last few days)

    2. The games aren't that sticky, and the developers are even less. Zynga, the makers of Mafia Wars & Farmville (which is either the reason Facebook exists for some users, or the bane of others' existence, I was in column B) is already starting to diversify it's platform away from a dependence on Facebook, onto FarmVille.com, onto an iPhone application and most impressively to me at least, into 7-11's.

    Again, this is just canary in the coal-mine stuff – and it makes business sense to not be dependant on a single platform – but it's being reported that the 30% margin FaceBook which is introducing for their site-wide credit platform is significantly higher than industry margins (around 7% although curiously the same as Apple's) is the primary reason for just the diversification you're talking about, Zynga are even going as far as to create their own social-gaming network Ziive/Zynga Live.

    In the more extreme rumours, when negotiations between FB and Zynga apparently broke down this week, Facebook threatened to shut down Zynga's feeds and Zynga threatened to leave Facebook, and are still preparing to do it “within weeks”.

    http://techcrunch.com/2010/05/07/zynga-gunning-…
    http://venturebeat.com/2010/05/07/zynga-plans-z…
    http://www.businessinsider.com/leaving-facebook…
    http://kotaku.com/5535585/farmville-coming-to-a…
    http://techcrunch.com/2010/05/13/zynga-teardown/

  • http://aqualung.typepad.com/aqualung/ aqualung

    Lee, even if these numbers were hot off the press they are trailing indicators – the opinions of the early adopters are way off the mainstream at the moment, but they are leading indicators. It is also instructive to watch where the developers go – as Oli indicated some of them are extending their software beyond Facebook

  • http://dominatemafiawarsstrategyguide.com mafia wars guide

    of course Facebook isn’t in trouble..they are going to be on top for a very very long time

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