Social Networking’s Explosive Growth to Plateau in Five Years

Global active memberships in social networking sites are expected to reach 230 million at the end of 2007 (including multiple memberships by users), and revenues from social-networking services should reach $965 million, growing to $2.4 billion by 2012, according to a new report, writes MarketingCharts.

But the explosive growth in social networking will plateau worldwide by 2012 - and earlier for the United States - according to Datamonitor’s report, “The Future of Social Networking: understanding market strategic and technological developments.”

In the meantime, infrastructure providers, social-network providers and wireless players stand to profit, said Ri Pierce-Grove, technology analyst at Datamonitor and author of the report.

In the United States, MySpace accounts for nearly half of 2007’s 54 million social-network memberships, according to Datamonitor (see chart of social networks’ US membership market share):

• MySpace: 47.4 percent
• Facebook: 18.2 percent
• Google’s YouTube and Orkut: a combined 7.6 percent
• Flickr 7.1 percent

(Note: YouTube traffic is included to the extent that it applies to social networking, as estimated by Datamonitor.)

Most large social-networking services, especially those that allow the distribution of content like video, have wide geographic reach, according to Datamonitor, which projects that by yearend 2007…

• Asia Pacific will account for 35 percent of the world’s social-networking memberships.
• Europe, the Middle East and Africa (EMEA) will account for 28 percent.
• North America, 25 percent.
• The Caribbean and Latin America (CALA), 12 percent.

Adoption curves vary dramatically by region, but Datamonitor expects membership growth in all regions to peak by 2009 and level out by 2012.

“The extraordinary proliferation of online social networks is fueled by real innovation and is substantially changing the way we communicate,” said Pierce-Grove. “However, the hothouse atmosphere of easy capital, media attention, and user curiosity which stimulates creativity will not be sustained indefinitely.

“All players therefore must develop a two-pronged strategy in order to survive the extremes of heat and eventual chill which this market will undergo,” she added.