Probably every dutch student remembers the good old time of Hyves. For those who are not familiar with it, a short explanation follows. Hyves was a social media platform were you could connect with friends, post pictures, status updates and push on a button to give a ‘respect’ to others. Sounds familiar? It probably does, Hyves was basically the Dutch version of Facebook. It had the same features and it was a popular as Facebook is nowadays. In may 2012 Hyves counted 10 million Dutch users and had 5 million unique visitors a day and it got acquired by the Telegraaf Media Group for nearly €50 million, which was mind blowing back then.
However, nowadays Hyves as a social media platform does not even exist any more. Why? There were too many substitutes that were more popular. Although it is hard to imagine a world without Facebook, from a theoretical perspective it can follow the same destiny as Hyves. Funny enough there are some striking examples showing that Facebook is extremely aware of this fact. Look at the following two acquisitions:
9 April 2012 Instagram for $1 billion.
19 February 2014 WhatsApp for $19 billion.
Although the majority of the news articles consider those acquisition as a positive development for Facebook, arguing that the strategic value behind them is almost priceless, there are also some more negative voices. Those two company’s had in common that they were a threat to Facebook, as Facebook was for Hyves. Facebook did it best to come up with its own Facebook messenger, however, it did not work out. Facebook did it best to be the biggest photo sharing platform, however, it neither worked out. Instead of investing in their own platforms they simply bought the ones who were better and threatening Facebooks future. This could of course be a perfect business strategy, if it is at least is your business strategy. Mark Zuckerberg mentioned the following after the purchase of Instagram: ” This is an important milestone for Facebook because it’s the first time we’ve ever acquired a product and company with so many users. We don’t plan on doing many more of these, if any at all.” This statement makes the purchase of WhatsApp, less than 2 years later, look like a kind of ‘panic football’.
But as long as it works it works. Facebook made a profit of roughly $3 billion in 2015 and accomplished a $1 billion profit in the first quarter of 2016. Besides, it is not just ‘panic football’, Facebook is playing. On the 25th of March 2014 Oculas VR was acquired for $2 billion. With this new technology, which was not directly a competitor of Facebook, the company is preparing itself for the future by distinguishing from competitors.
And it will probable be this path, Facebook has to follow, if it wants to avoid a destiny like Hyves encountered. Only by being a better alternative compared to other social media platforms, like Snapchat, Pinterest, Twitter and Vine, Facebook will be capable of keeping its critical mass of users that is necessary to stay alive.
References:
https://nl.wikipedia.org/wiki/Hyves
https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitions_by_Facebook
https://www.theguardian.com/technology/2014/jul/22/facebook-oculus-rift-acquisition-virtual-reality
http://www.businessinsider.com/why-facebook-buying-whatsapp-2014-2?international=true&r=US&IR=T
