Over the past few years Facebook hasn’t just dominated its competition, it’s crushed it. Facebook has over 800 million users worldwide and it continues to grow – this complete domination of the social networking system has made it near impossible for other social sites to survive. Sites such as MySpace and Hi5 were desperately attempting to hold onto their last few shreds of members before they were eventually sold off.
Before Hi5 was sold Alex St. John, the president and chief of technology officer at Hi5, attempted to pivot Hi5 into a social gaming website as the race to social networking dominance was already over. After two years of social gaming, the Hi5 executives decided that it would be better off to sell Hi5 to Tagged, but this was undoubtedly done at a huge loss. MySpace, when it was sold lost $545 million in value from when it was initially purchased, unfortunately the price at which Hi5 was purchased is unknown.
Hi5 is the most recent social networking site that was sold off. What is amazing is the fact that Hi5 used to be in the top three most popular social networking sites, now it has faded so far into the background that most people don’t even remember it anymore. While the specific terms of the deal between Hi5 and Tagged haven’t been released, Greg Tseng, Tagged’s CEO, did elaborate a bit more about Hi5’s future.
Greg Tseng admitted that Facebook does indeed have social networking in the bag; however he claimed that the next big thing for social websites was “social discovery”. Meeting up with people you already know is great, however social discovery will enable users to meet new people and potentially develop friendships with them.
Tagged’s CEO seems to have the right idea in mind. Instead of letting Tagged go down like a sinking ship in the social networking waters, he quickly withdrew it clear back in 2007 and set his sights on advancing in another social area. As Greg Tseng stated “The downfall of MySpace (and others) was they kept trying to compete head on with Facebook and then pivoted too late. One strategy is for us to grow and dominate and take other social sites and pivot them.”
As for Hi5’s future, it will continue to operate with its current member base, however Tseng stated that Hi5 and Tagged will be combined in a way that lets users log into each one, or connect to the separately. This union will make Tagged at about 300 million registered users with about 20 million active users.
Despite the drastic member size between Tagged/Hi5 and Facebook, Tagged is still an incredibly profitable website. In 2010 the company pulled in about $33 million and Tseng predicts that at the end of this year it will be at about $43-$45 million. Next year, however, Tseng has much bigger expectations.
In 2012 Tseng wants to double the revenue and if he manages to do that he will consider an initial public offering. Overall Greg Tseng’s goal is to create a company that is “lasting and independent and sustainable”.