No longer taking aim at becoming the Chinese Facebook, the company now has a new focus.
Renren Inc., which had originally drawn the attention of the world as it attempted to become the lead social network in China, is now turning its attention toward mobile commerce and mobile games in order to remain relevant and profitable.
Even without Facebook’s competition in China, the company still faced several roadblocks.
As the top social network in the world is not accessible in China, Renren didn’t suffer with competition from that company, but it was still held back by the flooded social network marketplace. Microblogs are attracting a tremendous amount of attention and followers within that tremendously competitive online marketplace, and advertisers are hesitant to place their marketing dollars in ads on social networks.
For this reason, Renren has altered its business model with mobile commerce in mind.
According to Joseph Chen, the chief executive officer of the company, they are taking steps beyond online marketing in favor of revenue drivers that hold a more long term position. Even by last year, the company had already recognized that it would need to turn its attention toward a paid services model.
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At that time, he explained that “I’m in the camp that thinks paid services including e-commerce and gaming will be the mainstay of social networks.” After following that train of thought, Renren experienced a broad diversification in its revenue streams. It is now opening up mcommerce activities, as well as online and mobile gaming, online video, and has even taken steps into group buying businesses. These services combinations are steadily reducing its resemblance to a social network, such as Facebook.
Instead, it is starting to look a lot more like Facebook’s primary rival, Tencent Holdings Ltd., which is an internet conglomerate that uses a type of Chinese style.
Ever since May of last year, when Renren first went public in the United States, it has received consistent warnings about the massively competitive Chinese marketplace, in which social networking is highly fragmented. The last two quarters have shown rather weak results which have been the outcome of high spending and low advertising income. Now, with mcommerce as a main goal, it is seeking to reverse this trend.