The Social Networking Sites industry is extremely concentrated. The top three companies include Facebook, Twitter and LinkedIn and account for 83.7% of revenue in 2016. Facebook alone holds 71.2% of the market and the company's high market share pushes up the average industry profit margin. However, despite the industry's high profit margin, many companies operate at a loss. To gain users, many websites offer their services for free. However, as noted by IBISWorld Industry Analyst Madeline LeClair, "It can take a long time to build up a large user base and many companies fail to do so before running out of money."
Over the five years to 2021, IBISWorld expects revenue growth to slow significantly due to decelerated growth in the number of mobile internet connections and the percentage of services conducted online. Despite slowed revenue growth, new operators will continue to enter the industry and push up competition. To compete, social networking sites will increasingly focus on serving niche markets and advertisers.
Internet Service Providers
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IBISWorld Industry Report Key Topics
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