ITV is to abandon Friends Reunited’s subscription model in the face of increased competition from free-to-use entrants in the social networking arena.
Observers say this raises big questions about both ITV’s digital strategy and the business model for networking sites. ITV had pledged to put digital at its heart when it bought Friends Reunited for £120m in 2005.
However, observers at the time questioned the site’s fit with ITV and what value it could add.
Commenting on the decision to axe subscriptions, one observer says: “ITV may not be the first big media owner to buy a social network, but it is the first to discover that revenue models have been exaggerated. It’s also the first to see revenue is about content – not just community.”
He adds that we are now witnessing the same sort of hype experienced at the end of the 1990s in the dotcom boom and bust.
The site launched in 2000 and quickly grew, rising to about 12 million users at the time of the ITV deal. This figure has now fallen to about 9 million and is dwarfed by the 100 million registered users of MySpace and the 50 million-plus users on Facebook.
When announcing ITV’s interim results in August, Sir Michael Grade had said “some elements” of the site would be opened up, meaning some free services for users.
An ITV spokeswoman declined to confirm whether the £5 subscription charge is to be ditched, saying only that actions were being taken to make some of the site’s services available free to users.