Mixi: Even Bigger Than MySpace (sort of...)

Mixi, Japan's most popular social network and it's third (or second depending on metrics) most popular website after Yahoo! Japan and Google Japan, went public over a week ago and reached a valuation of nearly $2 billion by its second day on the market. Mixi's IPO is perceived as the benchmark by which other Asian social networks will be valued.

So why all the hype?

While the buzz around MySpace and other social networks is big here in the States, Asian social networks such as Mixi and South Korea's Cyworld are even more ingrained into some cultures abroad. In the case of Cyworld, which is said to be used by ~90% of South Korean youth, the site is so popular that its messaging system is said to be usurping email as a means of communication. Mixi is "happening in a uniquely Japanese way: it's heavily mobile-based, it's privacy-oriented, and it's happening concurrently on both a mainstream and niche market level." - Metropolis Magazine.

Over the past year, Mixi’s daily reach has increased 500% to nearly 8 million visitors per day and over 5 million member profiles. Approximately 70% of these users are active, logging in at least once every 3 days for an average of almost 4 hours. Naturally, with an captive audience like that, the company is making a lot of money through advertising.

Mixi is an 18+ invite-only network with lots of features that keep bringing its users back for more. In addition to profiles, blogs, and forums, Mixi features photo hosting, product reviews, mobile connectivity, a job search site (Mixi started as a recruitment advertising site in 1999), and Mixi Station, a music player that automatically uploads your playing songs in iTunes, Windows Media Player, or Winamp to a community music site (similar to MySpace).

Is Mixi overpriced? It sure looks like it. As of last Friday's closing, Mixi was valued at 209 times its forecast earnings per share for the year to March 2007. My first reaction when I hear valuations of $1+ billion for social networking sites such as Facebook is to laugh. My second reaction is to cry since it's not me that's making all this money ;)

As social networking spreads all over the world, Mixi is being joined in the key market of Japan by MySpace, Cyworld, Windows Live Spaces, Yahoo!, retailer Rakuten, Gree, Any and other social networks. Mixi currently dominates this space and looks to continue for a while to come. Mixi appears to have some staying power over these new entrants in Japan while MySpace in the U.S. does not. I attribute this to Mixi's being built inherently for Japanese culture from a strong niche audience (5 million in Japan is not THAT much), as well as the many features it provides. While MySpace may have reached its peak, Mixi just keeps growing and growing.

On that note, Rupert Murdoch is now expanding MySpace into China.

Links:

Mashable

Paid Content

CNET

BusinessWeek