Business, Economics and Jobs

Think Friendster’s dead? Not in Asia.


BANGKOK, Thailand — Once America’s liveliest online social network, Friendster is now regarded in the United States with nostalgia and pity.

Just four years after the California start-up’s 2002 launch, the New York Times called Friendster “shorthand for potential unmet.” Online magazine Slate described it as a “ghost world.” Comedian blogger Patton Oswalt asked, “Have you been to Friendster lately? The rats are so tame they’ll let you pet ‘em.”

Under the nearly 500 million-user reign of Facebook, resuscitating Friendster may seem risky. But the man who bought Friendster in January, a Malaysian web wunderkind, insists its coming rebirth will be driven by Asian teens oblivious to its troubles in the United States.

“People say, ‘Friendster? Why didn’t you buy Facebook? You couldn’t afford it?’” said Ganesh Bangah, CEO of the Malaysian firm MOL, or Money Online. “Once they understand the rationale, no one doubts it. They see the potential.”

Buying Friendster is Bangah’s boldest move yet, but it is not his first. Inspired by Bill Gates’ nerd-to-mogul transformation, he quit college to found MOL at 21.

Now 31, he is Malaysia’s youngest CEO of a publically listed company and, according to his Friendster profile, he is “trying to become the richest!!” His company, which collects cash for use in online games, processes more than $200 million in payments each year.

That Bangah is young and Southeast Asian is fitting. These days, so is Friendster.

While the network capitulated U.S. users to MySpace and Facebook in the mid-2000s, it exploded in the Philippines, where nearly half its users are located. It later spread to Malaysia and Indonesia. Now, roughly 80 percent of Friendster’s 116 million users live in Southeast Asia.

Friendster’s previous San Francisco-based owners puzzled over turning a profit from an unintentionally Asianized Friendster. But Bangah is undaunted. “This region is a devil to a lot of U.S. companies. They get traction here … but they can’t monetize,” he said. “We already know how to monetize this region. We just need the traffic.”

Much of that social networking traffic in Asia is being devoured by Facebook, said Thomas Crampton, a Hong Kong-based social media analyst with Ogilvy Public Relations Worldwide. Friendster, he said, would be wise to avoid a head-on confrontation with Facebook.

“Facebook has romped across Asia like no other internet service ever has before,” he said. “They’ve gone country to country without investing much at all. They’ve taken over local players, global players, really absorbing a huge portion of the social networking market across Southeast Asia.”

Instead of taking on Facebook, Bangah wants to create an alternative. Under MOL, he said, Friendster will be reborn as a youth-marketed site catering to teen tastes in Asia as well as India.

Friendster users will likely keep their Facebook profiles, he said. But as teachers and graying aunts crowd Facebook, he hopes kids will see Friendster as a loose and relaxed refuge from meddling adults. “Facebook has become very ‘real life,’” he said. “We want Friendster to be your virtual life. You could be a girl in one persona. You could be a big monster in another.”

Friendster’s price was undisclosed, though the Washington Post-partnered Tech Crunch blog estimated the sale value at $26.4 million. Any online speculation, Bangah said, is “just guessing.” Google reportedly offered $30 million for Friendster in 2003.

Friendster’s newfound profitability, Bangah said, will rely on it coming into an online gaming hub. This is already MOL’s bread-and-butter: charging for online games, which range from space cowboy shoot ‘em-ups to Disney-esque quests for kids.

In Asia, where teens are less likely to have internet service or home gaming systems, competing against friends in neighborhood cyber gaming cafes is a huge and growing pastime. In countries like China, Crampton said, social networking and gaming has become a vibrant alternative to the “stultifying boring state-run media.”

In the overhauled Friendster, users will play games for free. Winning, however, may require players to purchase virtual items — perhaps a special sword or a skateboard depending on the game — that lend a competitive advantage.

“There are people who just play games for fun,” Bangah said. “But you really need to spend money to win. And there’s that 6 percent out there who say, ‘I have to win.’” He expects this contingent to spend about $30 to $40 per month.

Though Bangah insists Friendster won’t directly compete with Facebook, much of Facebook’s Asian growth has relied on these internal mini-games. A Taiwanese national obsession with the Facebook mini-game “Farmville,” in which users tend a virtual plot of land, helped Facebook conquer competing social networks.

“In Taiwan, Facebook equals Farmville,” Crampton said. “It’s viewed by many as a gaming platform, not a social network.” Worldwide, roughly 50 percent of all Facebook users play mini-games inside the site.

MOL is now aggressively adding new games to Friendster — roughly three per month — and plans to complete its transformation to social networking arcade before the year’s end. But the site’s biggest obstacle, Bangah said, is convincing the world that Friendster is a unique, youthful alternative to Facebook. Not a struggling rival.

“The big negative is that we’re seen a competitor to Facebook. We’ve got to change that,” Bangah said. How will he push that message? “Maybe we’ll advertise on Facebook.”