14 DAY TRIAL // Social networking is huge in terms of users but less so in terms of revenue. While the biggest social networks are profitable the income is still well below their potential. One aspect that has proven much more profitable though is social gaming, which has taken off in the past months. With companies like Zynga on path to make $100 million this year, it's clear that there is a lot of money to be made from social gaming and social network hi5 is gearing towards this part of the market in hopes of getting a nice slice of that money.
The social network has introduced a totally new design with a much greater emphasis on gaming than the virtual currency it introduced late last year, hi5 Coins. hi5 is still very much a social network with all the usual components, the profile the photo albums, friends list etc., but games and coins are now front and center along with the links to your profile and your friends page.
The site has been moving towards this for quite a while. It introduced the coins system last December laying the groundwork for the integrated gaming and payments. A couple of months later it launched a new gaming site separate from the main one but integrated with the social network. Since then it has been working on procuring several deals with social gaming companies like Playdom but also with Mochi Media to access their unified Flash payment platform.
Gaming has already proven a success for the company, as already one third of the site's traffic comes from the gaming section and 15 percent of its revenue comes from the Coins transactions. If the move towards integrating more gaming features with the site proves to be successful it should help hi5's coffers quite a lot and it may also help it gain some new users especially in the US judging by the success social gaming has had on Facebook and MySpace.
Finally, with the redesigned site, hi5 also introduced a new Flash-based 3D avatar system called hi5 Stars. These will change their appearance according to your mood and will also be customizable. There are plans to launch additional premium customization options down the line and they may be integrated with some of the games at some point. The changes are pretty thorough but it remains to be seen if they succeed in attracting new audiences or alienating the ones already using the social network.