Overview
Cyworld launched in 1999[9] and was purchased by SK Communications in 2003.[7] It became one of the first[5] companies to profit from the sale of virtual goods.[6]
Cyworld was wildly popular in its home market, with 2005 claims that nearly every South Korean in their twenties[10] and 25 percent of the South Korean population[11] were users. By 2006 its domestic user base numbered 19 million,[12] but this dropped to 18 million by 2008.[13]
Cyworld's reception in some overseas markets did not prove as enthusiastic, and by 2010 Cyworld had ended its operations in Germany, Japan, and the United States.[8] As of 2009, it continues to provide service to the Chinese and Vietnamese markets where it has subscriber bases of seven million and 450,000, respectively.[8]
Initial stages
The idea for Cyworld started in August 1999 by KAIST student organization the 'EC club', a club that took on online business projects. The club members got the idea to create a social networking website while discussing topics for a research project. Though most club members abandoned the project after graduation, Dong-Hyung Lee continued to pursue the project, taking on the role of CEO from December 1999.[14]
The word 'cy' is a Korean word meaning 'between people', underlining the networking aspect of the website and connoting a close relation between the website users. However, most misinterpret 'cy' as an abbreviation for 'cyber' due to its fortis; 'sai' corresponds to a more accurate pronunciation of a Korean word for 'between.'[14] The original nature of the term 'cy' demonstrates Dong-Hyung Lee's vision for the site. He wanted to create an Internet community that allowed people to form close relationships, rather than a community where people merely sought information for business prospects.
Cyworld in its early stages was quite different from what it is today. It was a website that showed a list of members from the same hometown or school.[14] The address book for each member was updated automatically according to the personal information its members provided.[15]
Minihomepy
In the summer of 2002, Cyworld launched the "minihomepy" project, a last chance to turn things around before the business had to shut down. CEO Dong-Hyung Lee put contents provider Ram Lee in charge of the project. It was an instant success.[16]
Offering many methods of expressing oneself, the minihomepy had features such as a main picture, history, user profile, photo story, story room, background music, photo album, diary, bulletin board, video clips, and decorating links. Another component of the minihomepy was the miniroom, a decorative online room furnished with virtual furniture.
One of the main reasons for minihomepy's success was people's dissatisfaction with the "individual homepages" that were prevalent in Korea at the time.[16] While individual homepages were initially widely popular because they enabled people to express themselves online, the programming knowledge (e.g. HTML, FTP) required to create an individual homepage was too daunting for most people. Although knowledge barrier was partially resolved through homepage programming services such as High Home, there still remained a significant issue: the means of communication between individual homepage users was absent.[16] Individual homepages were like "stranded islands" in the vast sea called the Internet.[16]
Merger with SK Telecom
In August 2003, Cyworld merged with SK Telecom, a Korean communication company and owner of the domain Nate.[20] The rapidly increasing number of subscribers was getting too difficult for Cyworld to manage on its own, and SK promised resources for further growth in the market. Although it was incorporated into the SK community department, Cyworld retained its brand name, service, and independence.[20] The CEO of Cyworld Dong-Hyung Lee was appointed as the general manager of the Cyworld department, and he moved on to be the CEO of Cyworld Japan in May 2005 until he left the company in December 2008 to pursue other business adventures.[21]
The merger immediately led to significant market success. By the end of 2003, Cyworld gave rise to the terms "cyholic" (a Cyworld addict) and "cyjil" (jil is a Korean pun for action, so cyjil means doing Cyworld-related activities).[22] Cyworld became a sensation among the Korean public, more than tripling in monthly visitors (from 2 million to 7 million) from early 2003 to November 2003.
2011 data leakage and decline
As Facebook began its services in Korea in 2009, Cyworld slowly began to lose its status as the only popular SNS service in Korea. According to some research, Facebook's simpler design and function were more appealing and easier to use than Cyworld.[27] As Cyworld did not offer global services, it was an undesirable service for people who wanted to contact friends around the world.[27] The introduction of smartphones to the market was also a key factor in Cyworld's decline, as both Facebook and Twitter offered stronger interconnectivity with mobile platforms.[28] Kakao Story, an SMS service exclusive for smartphone users, had an advantage over its rivals due to its connection with mobile service KakaoTalk, which has over 55 million members.[28][29]
Takeover by CyworldZ
In April 2021, CyworldZ which is a subsidiary company of Cyclub Corporation took over Cyworld. CyworldZ has acquired user data from SK and geared up to jump into the market with its metaverse-powered service.
Engagements in foreign markets
After its domestic success Cyworld began to venture into foreign markets. In 2005, it started services in China and subsequently entered the Japan and Vietnam markets.[36] Cyworld lost out to Japan's Mixi and exited the Japanese market in August 2008.[36] As of 2009, its operations in China and Vietnam were more optimistic; it had seven million and 450,000 members, respectively.[36]
Cyworld entered the US market in 2006, believing that many US teenagers would use multiple social networks[37] and seeking early access to a then-quickly growing market.[38] However, it lost market share to Facebook and exited the US market in February 2010.[8]
Present ownership
In 2016, Cyworld was acquired by Aire, inc., which is owned by Freechal founder Jeon Jae-wan.[40] CyworldZ took over Cyworld from Jeon Jae-wan[41] in Dec 2020, CEO Kim Ho-gwang was dismissed from the position and Son sung-min and Kim Tae-hun were assigned as CEOs.[42]
