Back in 2011, Facebook was adding about 55 million monthly active users each quarter. That number has stayed roughly the same, which means the growth rate has slowed -- a sign the company may finally be running out of new participants while a crop of smaller competitors has been getting a slice of the action.
Analysts acknowledged Facebook's market saturation -- the social network now has 1.11 billion active users worldwide -- as a cause for the slowdown. But they also said social media competitors may be drawing users away from Facebook.
Chris Silva, an analyst at Altimeter Group, said that as the social media market has matured, people may be moving away from Facebook, a "general entity in social," and gravitating toward niche services.
Facebook, the world's largest social network, has evolved into a service that aims to be everything to everyone. It's a place to share photos, but it's not the best place to share photos. It's a place to communicate with your friends, but there are better tools to use to communicate with friends. Users can find news on Facebook, but if you're looking for news, Twitter is usually a better place to start.
"Facebook is one of the social networks purposefully not built for a special niche or a special user base," said Silva.
Other popular and growing social networks and apps were built with a specialization in mind: LinkedIn is where people go for industry news, to look for a job and to network. Path, which was started by a former Facebook employee, is a place to share high quality photos and communicate with a more intimate community. Instagram, which Facebook now owns, is for sharing photos with arty filters. Snapchat allows users to share and annotate photos and videos for short periods of time. Even WhatsApp, the hugely popular messaging service, is a Facebook competitor.
"Not all these other tools are new," Silva said. "But I think they've come to prominence, and as users get more social media savvy, we start dialing in what our preferences are."
And while these services are not nearly the size of Facebook, they're growing.
Path revealed last week that it's adding 1 million new users per week. In January, GlobalWebIndex called Twitter the "fastest growing social platform in the world." LinkedIn, which market research firm IBISWorld predicts will have nearly $1 billion in revenue this year and is aggressively trying to engage users with personalized content, added 13 million new members in the fourth quarter of 2012.
"The struggle with Facebook is finding new ways to bring value while new competitors keep popping up," said Dale Schmidt, a technology industry analyst at IBISWorld.
Messaging is one place where Facebook has lost ground to scrappy upstarts. "Over the top" messaging apps like WhatsApp and Snapchat, which allow users to share text and content without using their carrier's SMS allotment, are experiencing a tremendous rise in popularity. WhatsApp in January processed 18 billion messages a day, while SnapChat users sent more than 60 million photos each day.
Facebook released Messenger, a messaging app similar to WhatsApp, to try to capture some of this market, but it has been less successful than companies that started as "over the top" services. WhatsApp Messenger, which costs 99 cents, is currently on 11 of 15 Top 10 lists of social media apps in the iTunes Store, while Facebook Messenger, which is free, is only on six of the top 10.
Facebook came out with a Snapchat-like service called Poke in December, but it has failed to gain traction among users.
Facebook Home is perhaps Facebook's most aggressive foray into messaging; the "apperating system" for Android phones comes with "chat heads," a feature that allows users to chat and text without leaving other apps. But even Home has not been received well. More than half of the users who downloaded it gave it one out of five stars in the Google Play store, according to Wired.
While Facebook has a long way to go before users flee the service -- it's still growing, after all, and revenue this quarter exceeded analysts' expectations -- the company must innovate in order to fend off competition from more nimble startups.
"Part of me is wondering if there's a big base of Facebook users who are off Facebook because they're being better served by other messaging apps," said Silva. "If Facebook isn't serving them with a strong messaging platform and giving them what they're getting from these other platforms, that might be why we don't see that hockey stick growth."
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Source: http://www.huffingtonpost.com/2013/05/02/facebook-competitors-slowing-growth_n_3196791.html
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