News Corp (NWS) today announced a deal with online game company Oberon to provide online fun which will "incorporate features into the MySpace games area that allows users to socialize by inviting friends to participate in multiplayer games and to chat while they are playing," according to The Wall Street Journal. Oberon already provides games to PCs, cellphones, and set-top boxes for firms including Yahoo! (YHOO).
But, the news is not about games. It is about how hard it has been for News Corp to earn real money on MySpace. With over 110 million registered users, MySpace will bring in less than $750 million in 2007. That is below News Corp’s forecasts from earlier this year. Yahoo! brings in almost twice that much money in a quarter.
Social networks have one significant weakness. Their users are not differentiated. Getting them to do one thing or follow one trend is like herding cats. Research shows that they tend to ignore advertisers. They are exactly the kind of audience marketers ignore. It does not matter how many people MySpace has. For big advertisers, they are easier to reach somewhere else, whether it is watching TV or looking at sports scores on MSN.
Murdoch & Co. are devilishly clever people and they hate to see their prized online company underperform financially. So, they are turning it into a portal. They have added music, video, instant messaging, VoIP through a partnership with Skype. And, now gaming. The plan appears to be that MySpace will begin to organized people around common activities so that they can be targeted by behavior, and, perhaps demography.
Being a portal is viewed as a nasty business these days. MSN and Yahoo! are not exactly pointed to as desirable businesses any more. Search and Google (GOOG) have taken that place. But, being a portal is better than being a social network. At least a portal has channels for marketers to target.
Call it the "portalization" of social networking. But, that probably is not even a real word.
Douglas A. McIntyre
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