Japan’sWeb,Mobile&GamingMarkets

BySerkanToto,PhDTwi?er:@serkantoto

AboutMe

• Tokyo‐basedweb,mobileandgaming industryconsultant

• AdvisorforstartupsinJapanandtheUS• JapancorrespondentforTechCrunch.com

• Personalwebsite:www.serkantoto.com

Agenda

I:Japan’sInternet

II:Japan’sMobileMarket

III:Japan’sSocialGamingMarket

I:Japan’sInternet

AsiaBoastsWorld‘sBiggestWebPopulaNon

Asia‘sWeb,IncludingJapan,ToExplodeBy2015

Source:Cisco,June2011

Japan’sInternet

•  SearchEngines

•  E‐Commerce

•  SocialNetworks

Japan‘sNo.1WebSite:YahooJapan

Japan‘sNo.1SearchEngine:YahooJapan

Source:NielsenOnlineJapan,April2010(PCaccess)

KeyFacts:SearchInJapan

•  YahoopartnerswithGoogleforbackend•  YahooJapanisnotonlysearch:aucNons,shopping,mail,games,(socialnetworking?)

• Mobile:No.1isGoo(NTTDocomo),butbothKDDIandSo\BankuseYahoo/Googlesearch

Japan’sInternet

•  SearchEngines

•  E‐Commerce

•  SocialNetworks

SizeOfJapan‘sE‐CommerceMarket•  In2008:$76billion(B2C,up13.9%from2007),accordingtoMETI

Sourceforgraph:Nielsen,2008

M‐CommerceIsBig

Source:Japan'sMinistryofInternalAffairsandCommunicaGons

World‘s2ndHighestOnlineSpend•  $6,688peryear(roughly2xKorea)•  Popularonlinepurchaseitems:– airlineNcketsandothertravel‐relateditems

– clothes– books– musicdownloads

Source:VISAecommerceConsumerMonitor,2009

PotenNalForFutureGrowth

Source:Nielsen,2010

Japan‘sNo.1E‐CommerceSite:Rakuten

RakutenIsSNllGrowing•  37,000merchants•  71millionmembersinQ1/11(+10%y‐o‐y)

•  76millionitemslistedinJuly2011(roughly2xmorethaninJuly2009),fromapplestotrucks

RakutenIsn‘tAmazonJapan•  Onlineshoppingmall„RakutenIchiba“•  RakutenTravel•  PortalandmediaBusiness

•  Creditcardbusiness•  E‐Banking•  SecuriNes•  E‐Money

•  Sports•  TelecommunicaNon

AmazonJapanisBig,ButRakutenIsBigger•  EsNmate:AmazonJapanracksup10%ofAmazonproper‘ssalesandincome

•  LargeinvestmentsinJapanasoflate(distribuNoncenters,forexample)

Rakuten‘sNextGoal:WorldDominaNon•  USA(Buy.com,Linkshare)•  China(Baidu)•  Asia:SouthKorea,Taiwan,Thailand,Indonesia,Malaysia,thePhilippines,India

•  Europe:Luxembourg,Germany,UK

•  SouthAmerica:Brazil

•  Endgoal:anintegratedcross‐bordere‐commerceplanorm

Japan’sInternet

•  SearchEngines

•  E‐Commerce

•  SocialNetworks

Japan‘sUniqueSocialNetworkingLandscape•  Basicstructure:realsocialgraphvs.virtualsocialgraphvs.mixedsocialgraph

•  3homegrownsocialnetworkswithroughly25millionuserseach:– Mixi(real/“Japan‘sFacebook“)

– GREE(virtual/mobilesocialgaming)– Mobage(virtual/mobilesocialgaming)

FacebookJapanHasLongWayToGo•  FacebookmembersinJapan:3.6million(roughly3.5%ofwebpopulaNon)(realidenNNes)

•  FacebookpenetraNonintheUS:68%

Source:Socialbakers

Twi?erIsAlreadyThere•  EsNmate:Roughly18millionTwi?erusersinJapana\er3/11earthquake(mixedidenNNes)

•  JapanisTwi?ercountry,alsoforbusinesses

Source:InternetWatch/AgileMediaNetwork2011

II:Japan’sMobileMarket

Japan:World‘sMostAdvancedMobileNaNon• 7thlargestmobileuserbaseintheworld(107million)

• 100%3GpenetraNon(first3Gnetworksin2001byNTT)

Source:Wikipedia

HotbedForMobileInnovaNon• World‘sfirstmobilewebsystemin1999• FullPCwebbrowsingoncellphones• Firstappplanormcreatedin2001• QRcodes• Onlinebillingandpayment• Offlinepaymentsthroughcellphones(e‐wallet)• First3Gnetworks• Cellphonenovels• MobiledigitalTV• Mobilehealthterminal• HDvideorecording• e‐bookfuncNon• Mobilesocialgaming• CommuterpassinpublictransportaNon• Waterprooforsolar‐poweredcellphones• IntegraNonwithhomeelectronics

VibrantMobileMarket•  Hardwaresectorcontrolledby– Sharp(marketleaderwith25%marketshare)

– Panasonic– Fujitsu‐Toshiba– NEC‐Casio– Kyocera

•  3maincarriers– NTTDocomo(marketleaderwith55millionusers)

– KDDIau– So\BankMobile

Japan‘sMobileGalapagosIsDoomed

Source:TheNikkei/MMResearchInsGtute

•  GREECEOYoshikazuTanaka:„By2015,featurephonesinJapanwillvanish.“

•  iPhoneandAndroidtodominateinfuture

III:Japan’sSocialGamingMarket

SizeOfJapan‘sSocialGamingMarket•  AnnualsalesofDeNAandGREEcombinedreacharound$2billion(adsincluded)

•  Differentsourcesofferdifferentnumbers:– Japan‘sCommunicaNonsMinistry:$1billionin2009

– MarketresearchfirmSeedPlanning:$1.46billionin2010(+49.3%in2011)

SizeOfJapan‘sSocialGamingMarket•  YanoResearch:$406millionin2009,$900millionin2010,$1.4billionin2011:

HighlyFragmentedAndUniqueIndustryStructure•  HundredsofsocialapplicaNonproviders•  Twodominantcompaniesdoubleasplanormandgameproviders:GREEandDeNA(„FacebookandZyngainone“)

•  SocialgaminginJapanismobile(exceptforYahooMobageonthePC)

•  Rekooonlyreallysuccessfulforeignplayer

DeNA:InternaNonalizaNon•  DeNA‘s3‐marketapproachwithMobageforSmartphone:– Japan– China– Restoftheworld

•  AggressiveM&A:– Ngmoco$403million– AuroraFeint,GameviewStudios,AstroApe,etc.

•  Failedtwiceonagloballevel:– MiniNaNon– Mobamingle

GREE:InternaNonalizaNon• MorecauNousapproach•  USofficeinJanuary2011

•  Partnerships:– SouthEastAsia:mig33– China:Tencent

•  OnlyonesizeableacquisiNonabroadsofar(Openfeintfor$104million)

•  75millionusers?

Thankyouforlistening!

ContactInformaNon

TwiRer:h?p://twi?er.com/serkantotoLinkedIn:h?p://linkedin.com/in/serkantotoFacebook:h?p://www.facebook.com/stotoEmail:totoserkanATgmail.com

PictureCredits

•  Slide:h?p://www.penn‐olson.com/2011/06/02/asia‐cisco‐internet‐traffic

•  h?p://www.google.com/url?sa=t&source=web&cd=4&ved=0CC4QFjAD&url=h?p%3A%2F%2Fhk.nielsen.com%2Fdocuments%2FQ12010OnlineShoppingTrendsReport.pdf&rct=j&q=nielsen%20online%20shoppers%20as%20a%20%25%20of%20internet%20populaNon&ei=ypL0Taq5IYzWvQPZxpXiBg&usg=AFQjCNHQvo6oSCKqVYZB7QIsDi7J98kCJw&sig2=c5RQlKU4u7u8W94Qe1vUQw&cad=rja

•  h?p://www.visa‐asia.com/ap/sea/mediacenter/pressrelease/NR_SGP_291009.shtml#Note1•  Japan’sendangeredphonespecies:h?p://e.nikkei.com/e/ac/tnw/Nni20110606IS3GALAK.htm