Taking the Pulse of the Japanese Internet

CSJ opened its WWW navigation/search services in early 1995, making it the first Internet navigation service in Japan. For more information about CSJ in English, go to http://www.csj.co.jp/English/index.html.

interviewed by Terrie Lloyd

You've been in the industry for over two years now. Do you still think the Internet is a good business?

Harumi Hosoe: It depends on how you define "good business." I think the Internet is very interesting, and I like it, so I'm very happy to be working in this field. But it's fairly difficult to make money in the Internet [industry].

Fortunately, because we started very early in Japan, our site is cited by many places, so we have lots of visitors. We're actually not doing active sales, yet we still get advertisements and we are making money. But things are getting more and more competitive. Unless you think very smart, it's very difficult to survive in the Internet market.

What is the major difference between the US and the Japanese Internet markets?

Hosoe: I don't think there is very much difference. But, based on our surveys, I'd say that the Japanese market is about eighteen to twenty-four months behind the US.

What's your estimate of the number of Japanese on the Internet?

Hosoe: Three million. That's calculated based on the number of visitors to our site and the distribution of the ISPs (Internet service providers) they use.

Are the Japanese shopping online as much as users in the US?

Hosoe: No. Although there are about 2,000 shopping sites in Japan, they are making almost no sales - except maybe for Kinokuniya bookstore, or Sofmap. Sofmap claims they are selling approximately ¥50 million to ¥100 million online per month.

Most Japanese do not like to buy online with a credit card. In part, this is because many articles in magazines or newspapers have warned that using credit cards on the Internet is dangerous. But the danger is overstated, I think.

Will Internet telephony become a big market?

Hosoe: Yes, I think it will be a big market, especially for international calls. Internet telephony will hurt carriers like KDD. But the small companies will face severe competition in the general market, which will be dominated by the large players. Maybe if they can find a good niche market....

What is the basic demographic profile of today's Japanese Internet user?

Hosoe: Young; users aged 15 to 35 account for two-thirds of Internet users. Also, male dominant, although the percentage of women is increasing, now approaching 20%. And more and more people are connecting from home.

I've read that women tend to use the Internet for e-mail, while men mainly use it to access sports information sites or sex sites....

Hosoe: Adult sites, certainly. Based on the usage index of our search engine, it seems adult site viewing accounts for about 50% of Internet use.

How do you see the future of the Internet?

Hosoe: I think it will still be chaos for the next several years, because anybody can do anything. The use of the Internet for shopping will certainly go up; it's becoming more and more convenient.

You used to have to get a company's telephone number, call and find out who's in charge, and ask them to send you a catalog. But now you can find the information on the Internet quickly; it's very convenient.

What do you think of AOL's chances in Japan?

Hosoe: AOL came to Japan too late; they should have come sooner. Their timing for entering the market was after all the major Japanese players - Sony, Fujitsu, NEC, NTT - had [each] started an ISP. Their market share will remain fairly small, I think, and they will have a hard time.

When I visited the US, I heard complaints from many people that AOL in the States is just like Bekkoame here: they have too many users, and their facilities are inadequate. Also, when I send Japanese e-mail to my friend in the US who uses AOL, it doesn't work. Because there were so many "attacks" on AOL, they decided to construct a very strong firewall - one that kicks out Japanese kanji encoding as well. So AOL users in the US can't read Japanese e-mail.

How many accesses does CyberSpace Japan get per day?

Hosoe: About 30,000 to 40,000 daily - that's individual people, not just hits.

Do you have any advice for foreign companies wanting to do business on the Internet in Japan?

Hosoe: Find a good partner, especially one who knows how to do marketing in Japan. Also, enter the market early; the Japanese are very quick to start up, but since the Japanese Internet market is about two years behind, if you come early you'll [have a chance].

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