Social Networking in Emerging Markets 2 / 18 Table of Contents 1. Market Overview. 4 1.1 Demographic and economic analysis of emerging markets . 4 1.2 Internet penetration in emerging markets . 6 2. Social Networking in Emerging Markets . 8 2.1 Social networking user base in emerging markets . 8 2.2 Social networking market size in emerging markets . 8 2.3 Social networking development timeline . 9 2.4 Social network market overview by segment . 10 2.4.1 Live video in emerging markets . 10 2.4.2 Online dating in emerging markets . 13 2.5 Social networking drivers in emerging markets . 15 2.6 Future social networking trends in emerging markets . 16 Appendix: List of Emerging Markets . 18 3 / 18 Figures Figure 1： Population of younger generations by region (Million, 2019) . 4 Figure 2： Global population by age group (%, 2019) . 5 Figure 3： Younger generations as a percentage of total population (%, 2019) . 5 Figure 4： Key statistics for emerging markets compared to developed markets and China (2019) . 5 Figure 5： Internet penetration rates in selected regions (%, 2019) . 6 Figure 6： Internet user growth rates in selected regions (% year-on-year, 2018-19) . 6 Figure 7： Mobile internet connectivity by region (%, 2019) . 7 Figure 8： Social networking user base as a proportion of total population in selected regions (%, 2019). 8 Figure 9： Global social networking market size (USD billion, 2014-2024) . 9 Figure 10： Global social networking market development timeline . 10 Figure 11： Global live video market size by revenue (USD billion, 2014-2024) . 11 Figure 12： Major live video segment players in emerging markets . 12 Figure 13： Online dating revenue for global and emerging markets (USD billion, 2014-2024) . 13 Figure 14： Competitive online dating landscape in emerging markets (2019) . 15 4 / 18 1. Market Overview 1.1 Demographic and economic analysis of emerging markets Younger generations, including millennials and Generation Z, have been raised with computers and on the internet. They are the largest group of social media users as they have used digital technology since they were young and are comfortable with the internet and social media. The population of emerging markets is skewed toward younger age groups. The global median age was approximately 30.9 years in 2019, but the median ages in emerging markets are normally lower than the global average. For example, Malaysias is 30.3 years, Indonesias is 29.7 years, Indias is 28.4 years, and the Philippines is 25.7 years. These younger population bases indicate great potential for the development of social media in emerging markets. Figure 1： Population of younger generations* by region (Million, 2019) Source: United Nations; Frost Frost Frost United Nations; Frost Frost Frost Frost & Sullivan 8 / 18 2. Social Networking in Emerging Markets 2.1 Social networking user base in emerging markets Compared to social networking user penetration in North America, emerging markets show significant potential for growth in social networking user penetration, especially in Pan-India and the Middle East and North Africa (MENA). The social networking penetration rate in Southeast Asia is already above the global average, and the average daily time spent on social networking is higher in Southeast Asian countries such as the Philippines (approximately 3h 53m) and Indonesia (approximately 3h 26m) than the global average (approximately 2h 24m). Figure 8： Social networking user base as a proportion of total population in selected regions (%, 2019) Source: Frost & Sullivan 2.2 Social networking market size in emerging markets The global social networking market has continued to grow and evolve toward an integrated ecosystem alongside the emergence of large numbers of social media platforms. The global social networking market reached 135.4 billion USD in 2019 and is forecast to reach 264.4 billion USD in 2024, representing a compound annual growth rate (CAGR) of 14.3% during the period. The ongoing COVID-19 pandemic has had fewer negative effects on the supply and demand sides of the online social networking industry than it has on many other industries. In particular, the social networking user base and average usage time for segments such as live video and online gaming have increased even though the average revenue per 9 / 18 user (ARPU) has declined as the pandemic has adversely affected the global economy. Therefore, market revenue growth has slowed since the COVID-19 outbreak, but the market should not be adversely affected in the long run. From the perspective of market segments by function, the live video market has shown notable growth over the past five years and is expected to deliver a CAGR of approximately 32.2% between 2019 and 2024. Figure 9： Global social networking market size* (USD billion, 2014-2024) Source: Frost & Sullivan *Note: Due to rounding, numbers may not add up precisely to the totals 2.3 Social networking development timeline Social networking market development can be divided into four main phases: 1) In Phase 1, online social tools such as email, websites, and social networking platforms primarily supplement offline communication and the range of online contacts is typically limited to ones real-world social circle. 2) In Phase 2, instant messaging and blogging platforms become popular. Users can create personal profiles online and connect virtually with friends. The increasing availability of image-enhanced content enriches the recreational appeal of online social networks. 10 / 18 3) In Phase 3, users can upload videos and music and share their personal interests with others. Meanwhile, the addition of increasingly engaging recreational features enables users to engage with a broader audience based on common interests. 4) In Phase 4, users can build social networks based on personal interests and interact with others via enhanced recreational features such as in-stream emojis, gaming, and virtual gift-giving. More recently, driven by the proliferation of advanced mobile devices and media technology, a new generation of online social productsso-called “live social” productshave emerged to empower people to connect, socialize, and be entertained in real-time via rich media channels such as live video and live audio. The addition of more live social functions and features increases the frequency and duration of users live social engagement. Moreover, the integration of live content along with other types of content enables users to interact in real-time and simplifies information transmission through diversified formats, including one-to-one, one-to-many, and many-to-many. Figure 10： Global social networking market development timeline Source: Frost & Sullivan 2.4 Social network market overview by segment 2.4.1 Live video in emerging markets 11 / 18 From 2014 to 2019, the global live video market grew from 2.9 billion USD to 19.7 billion USD, showing a CAGR of 47%. The market is forecast to continue rapidly growing and is expected to deliver a CAGR of 26.6% from 2019 onward to reach approximately 64.1 billion USD in 2024. While Chinas live video market has experienced rapid growth over the past decade, international marketsespecially emerging markets such as Southeast Asia, MENA, and Pan-Indiaremain at relatively early stages of live video market development. Emerging markets retain significant room for improvement in terms of the variety of online content and the potential to enhance users willingness to pay for online services. The live video market in emerging markets is expected to achieve a CAGR of more than 40% during 2019 to 2024. Figure 11： Global live video market size by revenue (USD billion, 2014-2024) Source: Frost & Sullivan Drivers of live video adoption in emerging markets include: 1) Higher disposable income: With increasing disposable income alongside per-capita GDP growth, users have a 12 / 18 higher propensity to consume. At the same time, user demands become increasingly diverseapart from satisfying basic needs for leisure, they expect online activities to fulfill needs such as social interaction and companionship. 2) Infrastructure upgrades: The adoption of higher-power smartphones with higher-resolution cameras and internet infrastructure upgrades represent important precursors for video-based live social market development. 3) Technology innovation: The adoption of new technology like virtual reality (VR) and augmented reality (AR) enhances the mobile livestreaming experience, dramatically enriching interactions between viewers and content providers. 4) Online social and recreational innovation: Innovative functions such as in-app games and live video content communities enhance user experience and stickiness by providing increasingly personalized services for different groups of users. This in turn increases users willingness to pay for online services. 5) Mobile payment penetration: Virtual gifting is one of the main ways livestreaming platforms monetize content. Viewers can purchase virtual gifts using a special in-app currency (with prices linked to real-world currency). Virtual gift prices can range anywhere from 0.01 USD to 100 USD or more.Viewers are likely to be increasingly willing to pay as the livestreaming industry implements easier mobile payment processes. Live video competitive landscape in emerging markets There are four main types of live video market players: general social platforms, video social platforms, game-centric live video platforms, and short video platforms with live video functionality. 1) General social platforms: Many general social platforms such as Facebook, Instagram, and Weibo have also launched live video functions. 2) Video social platforms: These are platforms in which online streaming media is recorded and broadcast in realtime. Live video content on these platforms includes entertainment, fashion, sports, and gaming. Major players in this segment include Uplive, YY, Bigo, Yingke, and LiveMe. 3) Game-centric live video platforms: These are platforms that focus on game-related content, where people record themselves playing games and broadcast in real time. Major players include Twitch, Huya, and Douyu. 4) Short video platforms with live video functionality: Provided by video hosting services, these players enable users to upload, store, share, and playback video content over the internet. Major players include TikTok, Kuaishou, Vimeo, Likee, and Xiaoying. Figure 12： Major live video segment players in emerging markets 13 / 18 Source: Frost & Sullivan 2.4.2 Online dating in emerging markets The global online dating market reached 5.4 billion USD in 2019 based on a CAGR of 51.1% from 2014 to 2019. As mobile device penetration and consumption habits lead more and more mobile internet users to seek serious committed relationships via online social networking, the global online dating market is expected to reach 15.7 billion USD by 2024, representing a CAGR of 23.8% between 2019 and 2024. Meanwhile, online dating in emerging markets has primarily been driven by expanding mobile internet user bases and the relatively large proportions of younger generations in these markets. In particular, users in emerging markets generally prefer face-to-face communication to traditional text messaging. As a result, online dating has witnessed significant growth as live video-based dating applications have emerged across markets such as Southeast Asia and MENA. Figure 13： Online dating revenue for global and emerging markets (USD billion, 2014-2024) 14 / 18 Source: Frost & Sullivan Key drivers of online dating in emerging markets include: 1) Younger generations embracing expanded social dating: Social trends in many emerging markets are evolving to include increased dating and marriage outside traditional social circles. This is helping drive adoption of online dating in part by increasing the phenomenon of “casual” dating and rates of interracial marriage. 2) Changing consumption habits: As per-capita disposable incomes rise and mobile payment methods proliferate, mobile internet users, especially among younger generations, are more willing to pay for in-app value-added services. 3) Changing dating platform preferences among young mobile internet users: Younger generations have grown up alongside rapid technology development and the popularization of the internet. Socializing via video or audio has become the dominant trend, rendering traditional text chat-based online dating less attractive. As a result, dating platforms with livestreaming functionality or other rich social features have become more attractive and competitive in the market. 4) Higher user demand on matching: Younger mobile internet users have increasingly high online experience standards. In online dating, this translates into users expecting to be matched with compatible users efficiently and quickly and being able to connect with them on demand. 5) Changing cultural norms: Even in more traditional cultures, social restrictions are being relaxed and individuals are increasingly open to new modes of socializing and new entertainment options. This open-mindedness is lowering cultural restrictions on individual choices and leading younger people in particular to pursue independent interests. 15 / 18 6) Conservative cultures in some markets drive demand for online social connections: Religious and cultural practices allow relatively limited offline social networking and entertainment activities in some markets. As a result, young users in these markets tend to have a strong affinity for online social networking. Major players in the online dating sector in emerging markets include Tinder, Badoo, Happn, Lamour, and Azar. Figure 14 shows online dating platform rankings in emerging markets in terms of monthly active users (MAU) and number of downloads. Figure 14： Competitive online dating landscape in emerging markets (2019) Source: Frost & Sullivan 2.5 Social networking drivers in emerging markets 1） Growing demand for combined recreation and social networking： Younger generations, especially Generation Z, were born in the internet age and are eager to engage in online social interaction. They show a higher degree of willingness to socialize online with different groups of people who may or may not have much in common with them, satisfying their desire to keep up with social trends. Traditional online social networks with text-based chatting are not able to hold these young users attention as they prefer a constant stream of diversified content. This has led online social network platforms to develop integrated applications that combine social interaction and other recreational functions such as watching videos, playing online games, or giving virtual gifts. 2） Increasing internet penetration rate: 16 / 18 Improving mobile internet infrastructure, especially the construction of 4G and 5G networks, is driving growing demand for smartphones in emerg