Thursday, July 21, 2005

Friendster's revenue estimates?



According to a few of the news releases on the News Corp/Intermix deal, Myspace accounted for roughly $5M / quarter revs for Intermix - roughly $20M for the year. Given the comparable traffic levels and advertising placements on both sites, we estimate Friendster's revs to be in the $20-$40M range - perhaps even higher w/ the Eurekster search feature and the newly added Games, blogging, and discussion groups features incorporated into the site.

With a 5x multiple assigned to the acquisition multiple, one can estimate that Friendster is fairly valued in the $100 - $200M range (assigning a growth premium to the 5x multiple and looking at other acquisitions in the internet/new media/social networking space: Classmates.com, neopets.com, uDate.com, Dice for $200M, and ZeroDegrees/IAC to an extent). That's a pretty good uptick in valuation from the $53M post that Battery, Benchmark, and KP offered to the company in November 2003.

So who would acquire Friendster? Google has certainly tried, but decided to go with build a la Orkut vs. buy decision. And what a good decision for GOOG - traffic levels and reach are comparable for both Orkut and Friendster. (Interestingly enough, GOOG has yet to monetize Orkut and other beta features like Video or News)



It makes sense for a Viacom (acquired neopets.com for $160M to capture the "world's largest and fastest growing youth community on the Internet"), Gannett (who recently acquired PointRoll and a smaller stake in Topix.net), or a traditional media player to pick up friendster (or even a Hi5.com, ranked #115 in traffic rank on Alexa). And indeed traditional media companies have been acquiring internet properties at a brisk pace this year. Read here.



UPDATE (10/23/05): Here are stats on myspace from a recent Fortune article. Friendster's revenues are roughly in the $3-7M neighborhood, one can assume:

MySpace is a speck of a business. It has 140 employees; revenues in the second quarter came to $7 million. But its importance lies in its growth rate—it's been adding 125,000 users a month—and in the amount of money it spends to generate content, which is very close to zero. Content generation is the job of the teenagers, who spend an average of one hour and 40 minutes a month on the site, writing blogs, listening to music, and viewing one another's photos. MySpace users are uploading photos at the rate of 1.7 million per day. (MySpace "flaggers," meanwhile, manually view uploaded photos and delete any that violate the company's no-nudity rule.)

1 comment:

Anonymous said...

Great analysis.