How The Facebook IPO Looks In France

Stakes are huge as the US-based social network goes public. But the effects of the estimated $100 billion Facebook IPO will ripple beyond Palo Alto and Wall Street, as tech “ecosystems” across the world bank on the network's reach. Here’s how FB

J'aime... (Goiaba)
J'aime... (Goiaba)

PARIS - As the American technology and business sectors gear up for the impending Facebook IPO, the rest of the world is also bracing for the effects of this critical turning point for social network behemoth.

France, which has a vibrant digital startup scene, includes an increasing number of gaming and advertising companies that have jumped on the social network's bandwagon. In 2012, it is estimated that Facebook could rake in nearly 220 million euros in sales in France, and young entrepreneurs are lining up to position themselves on a juicy if still risky market.

Facebook imposes a 30% fee on sales generated on its platform for games and applications, while the social network also lets companies do their own advertising for a revenue split. Partner companies could directly generate 500 million euros on this market. But betting on Facebook is still hardly a sure thing.

"You have to be agile, to know how to adapt quickly, because Facebook constantly modifies its platform," explains Charles Letourneur, associate director at Alven Capital, which has invested in several companies with focused Facebook strategies, including Antvoice and MakeMeReach. Letourneur also cautioned that startups should always aim to diversify their sources of revenue to better ensure long-term success.

Deezer and Dailymotion

Gaming is the most lucrative Facebook-related market for France, which is the ninth-ranked country for Facebook users with more than 24 million people. And though France has long been known for its dynamic video game industry, no European company has reached the size of American giant Zynga.

Some have been able to position themselves in niche markets: Adictiz, a small start-up from the northern city of Lille, shot to fame with "Paf le Chien", a man-kicks-dog game that attracted 15 million players worldwide.

"With markets like Russia, Asia or Latin America, we can still multiply our number of players by 12 or 13-fold by 2015," says Charles Christory, co-founder and executive officer at Adictiz. Compared to Zynga or German company Wooga, French video gamemakers' earnings are still modest. But isCool Entertainemnt, to name one, generated 9.1 million euros in sales for 2010.

French advertisers face harder challenges on Facebook, which tightened access to the market with an accreditation system that favored American companies early on. But in light of what Facebook founder and C.E.O Mark Zuckerberg calls the "socialization" of the economy, industries across the board are vying for untapped markets on the social network. "Social apps' enable users to see real-time updates on what their friends are reading, watching or listening to. French companies like music stream startup Deezer and Dailymotion video platform were the first to experiment, while established media company Canal+ allegedly racks up a quarter of its Internet traffic from Facebook.

Read the original article in French by Nicolas Rauline.

Photo - Goiaba

*This is digest item, not a direct translation

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Debt Trap: Why South Korean Economics Explains Squid Game

Crunching the numbers of South Korea's personal and household debt offers a glimpse into what drives the win-or-die plot of the Netflix hit produced in the Asian country.

In the Netflix series, losers of the game face death

Yip Wing Sum


SEOUL — The South Korean series Squid Game has become the most viewed series on Netflix, watched by over 111 million viewers and counting. It has also generated a wave of debate online and off about its provocative message about contemporary life.

The plot follows the story of a desperate man in debt, who receives a mysterious invitation to play a game in which the contestants gamble their lives on six childhood games, with the winner awarded a prize of 45.6 billion won ($38 million)... while the losers face death.

It's a plot that many have noted is not quite as surreal as it sounds, a reflection of the reality of Korean society today mired in personal debt.

Seoul housing prices top London and New York

In the polished streets of downtown Seoul, one sees endless cards and coupons advertising loans scattered on the ground. Since the outbreak of the pandemic, as the demand for loans in South Korea has exploded, lax lending policies have led to a rapid increase in personal debt.

According to the South Korean Central Bank's "Monetary Credit Policy Report," household debt reached 105% of GDP in the first quarter of this year, equivalent to approximately $1.5 trillion at the end of March, with a major share tied up in home mortgages.

Average home loans are equivalent to 270% of annual income.

One reason behind the debts is the soaring housing prices. In Seoul, home to nearly half of the country's population, housing prices are now among the highest in the world. The price to income ratio (PIR), which weighs the average price of a home to the average annual household income, is 12.04 in Seoul, compared to 8.4 in San Francisco, 8.2 in London and 5.4 in New York.

According to the Korea Real Estate Commission, 42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s. For those in their 30s, the average amount borrowed is equivalent to 270% of their annual income.

Playing the stock market

At the same time, the South Korean stock market is booming. The increased demand to buy stocks has led to an increase in other loans such as credit. The ratio for Korean shareholders conducting credit financing, i.e. borrowing from securities companies to secure stock holdings, had reached 21.4 trillion won ($17.7 billion), further increasing the indebtedness of households.

A 30-year-old Seoul office worker who bought stocks through various forms of borrowing was interviewed by Reuters this year, and said he was "very foolish not to take advantage of the rebound."

In addition to his 100 million won ($84,000) overdraft account, he also took out a 100 million won loan against his house in Seoul, and a 50 million won stock pledge. All of these demands on the stock market have further exacerbated the problem of household debt.

42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s

Simon Shin/SOPA Images/ZUMA

Game of survival

In response to the accumulating financial risks, the Bank of Korea has restricted the release of loans and has announced its first interest rate hike in three years at the end of August.

But experts believe that even if banks cut loans or raise interest rates, those who need money will look for other ways to borrow, often turning to more costly institutions and mechanisms.

This all risks leading to what one can call a "debt trap," one loan piling on top of another. That brings us back to the plot of Squid Game, "Either you live or I do." South Korean society has turned into a game of survival.

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