TT-403 -- Mobage phenomenon, ebiz news from Japan

* * * * * * * * * T E R R I E 'S T A K E * * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.

General Edition Sunday, December 10, 2006 Issue No. 403


- What's new
- News
- Candidate roundup/Vacancies
- Upcoming events
- Corrections/Feedback
- News credits

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=================== Fujiya Hotel Group ====================

A Classic Tokyo Escape

Leave the stress of city life behind for a taste of history.
A mere 90 minutes from Tokyo,the hot spring town of Hakone
awaits. Fujiya Hotel invites you to soak away your worries
and experience over 120 years of luxurious excellence.
Japan with style, the way it should be.

See for more information.


Last week we visited with Tom Sato, a pioneer of Japanese
e-commerce who started a self-import business called
Bargain America back in the mid-1990's. Sato has since gone
on to found/join several other Internet companies and
consultancies, before landing the top job this year in the
Mobile Division at ValueCommerce.

With Sato's entrepreneurship and experience in structuring
online businesses, we love to chat with him about what's
hot on the Internet.

And, according to Sato, what's hot right now is the cell
phone site Mobage Town, from mobile content developer Dena.
"Moba-ge" is a contraction of mobile games, and is a cross
between a Social Network System (SNS) and a games portal.
Essentially it serves up loads of games and provides
rewards that the players can collect and trade. The kicker
is that because it is SNS based, it has experienced a
humungous word-of-mouth growth over the last 9 months.

And we do mean humungous. The site attracted 100,000
members in its first 26 days, and has since grown to an
incredible 2m members since February. This is faster than
the initial growth curve of Mixi, and given that there are
more mobile broadband users in Japan, around 60m 3G
users, than fixed line ones, the capacity of the mobile
market is greater than Mixi's as well.

Mobage's users are also intense customers. Almost
unbelievably, Mobage gets 3,300,000,000 page views a month,
or about 100m a day, and using a "mini-mail" service, the
users send each other about 2.5m anonymous emails a day.
That's a lot of content for Dena to place user-specific ads

[Continued below...]

==================== TOKYO MONTHLY 21 =====================

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[...Article continues]

This all points to a continuing and probably massive
upswing in the business of Dena, which seems to know how to
pick winners. The company's stock price looks like one of
those bouncing cards when you finish a Microsoft solitaire
game. Dragged down by the negativity on Internet stocks, it
just keeps on bouncing right back up again, as it becomes
clear that Dena's Web and Mobile sites are piling on the
profits. The company's stock price has varied between
JPY446,000 and JPY192,000 per share in the last 12 months,
and currently is at JPY372,000, giving it a market cap of
JPY181bn (US$1.57bn) and a PER of 121.87!

While sounds pretty rich, the company is enjoying a stellar
increase in sales and profits. This last year, ending March
2006, the consolidated sales were JPY6.429bn (US$55.9m) and
net profit JPY1.487bn (US$12.93m). The outlook was for these
numbers to be up about 50% by March 2007. However, the
April-June quarter pretax profit came in at a 290.2% increase,
or JPY808m, so they are blowing right past their own

The Dena strategy is a classic portal play working on
multiple streams of income. They are creating lots of great
content and drawing in a large number of members.

They are targeting ad revenue, auctions, direct sales, and
selling technology implementations to other companies as
the service mix. The ironic thing is that they may be making
enough on raw advertising and direct sales, that they don't
really need to defocus with an additional downstream strategy.
One Japanese newspaper report says that Mobage alone
made about JPY400m in sales during the 3-months to
October. This amount came in just the first 5 months of

But nevertheless the company has moved ahead on its other
services and besides Mobage currently has a mobile version
of the highly successful Bidder's web auction site, called
Mobaoku -- with more than 740,000 registered members,
and Mobekore, an online shopping site.

As Mixi has proven, the way for these SNS portals to make
money is to milk the traffic. One such new project just
announced by Dena a few days ago, is a restaurant
recommendation web site. The company plans to list tens of
thousands of eating establishments nationwide and allow
readers to comment on their experiences and share these
comments with others. There are of course other services
around like this, most notably the pioneering
Restaurant Guide. But despite Asku's size, the newcomer is
threatening simply because it can flow the traffic from
100m page views a day by young women wanting to eat out!

With this one new site alone, Dena has told the Nikkei that
it is looking to make about JPY700m in additional ad sales
a year.

Here at Terrie's Take, we're not really into cell phones
that much, and like many PC users we have been unaware of
this massive consumer trend going on in the teens and
twenties set. A search of any Dena service on the western
search engine news services returns zero media coverage
other than the actual February 2005 listing of the company.

That's why visionaries and observers like Tom Sato are good
to hook up with every now and again -- just to keep us
aware and on our toes.

...The information janitors/


========== Logistics: The So-Fast Corporation =============

Why Choose the So-Fast Corporation?

Failed logistics is a frequent reason why foreign import
and retail companies in Japan eventually pull out. In the
start-up phase, management is focused on just getting the
business up and running, and so it is tempting to abdicate
the logistics to a large trading or transportation firm.
But the reality is that the convenience is soon replaced by
frustration -- as any change request, any problem
resolution takes forever and becomes "muzukashii desu ne".

Now, So-Fast Corporation offers its "Start Logistics
Package" which includes:
1. A reasonable and set price,
2. Simple distribution, and
3. Quick, customer-oriented service to satisfy end-users


+++ NEWS

- Tax -- now who's boss?
- Smoker's gene identified...
- ...And quitting helps more than you may think
- Exploding cell phones
- Big Australian R/E firms to invest

-> Tax -- now who's boss?

There are two tax think tanks whose input creates tax law
in Japan. These are the Tax Commission, which is a vehicle
for the bureaucrats, and the LDP's own Research Commission
on Tax. While the Tax Commission, with the support of the
Ministry of Finance, announced several weeks ago that they
are recommending the lifting of the 2003 tax breaks for
capital gains and dividends earned by shareholders of
public companies, this recommendation has been
overridden by the LDP tax panel, which says the tax breaks
should run at least another year. ***Ed: So, now we know
who's boss when it comes to tax law, and tough if the
Ministry of Finance doesn't like it. This is a good illustration
of how the bureaucrats have been emasculated by the LDP
over the last few years.** (Source: TT commentary from, Dec 9, 2006)

-> Smoker's gene identified...

Researchers at Osaka University have said that they have
identified the CYP2A6 gene as being responsible for
producing an enzyme that makes it easier for smokers to
smoke more. The enzyme breaks down nicotine, in essence
increasing the tolerance the smoker's body has to the
addictive substance. The research team found that about 70%
of the test subjects having an active gene were also
addicted to cigarettes. (Source: TT commentary from, Dec 6, 2006)

-> ...And quitting helps more than you may think

Another research group, this time at the Hokkaido
University, have found with positron emission tomography
(PET) imaging that if young smokers quit, then the negative
effect of smoking on their hearts and arteries disappears
after several months. The study looked at the after effects
on the arteries of 15 male smokers in their 20's and 30's,
who smoked 20 cigarettes a day then stopped for 6
months. The researchers plan to study middle age smokers
next. (Source: TT commentary from, Dec 9, 2006)

-> Exploding cell phones

After the Sony battery shock, now it is the turn of Sanyo
to be the center of an exploding lithium battery PR
disaster -- this time with batteries in cell phones. There
have apparently been 6 reported cases of Panasonic handsets
exploding, and NTT DoCoMo has said it will recall 1.3m
units that contain the suspected Sanyo batteries. Apart
from the P901i and other Panasonic models, some Mitsubishi
units are also said to be at risk. Sanyo's stock price tumbled
with the news. (Source: TT commentary from,
Dec 9, 2006)

-> Big Australian R/E firms to invest

Aus$36.5bn Australian real estate investment firm,
Challenger Financial Services, has said that it will raise
a fund to invest in Japanese residential and office
property. Challenger, which is backed by billionaire James
Packer, joins a number of other Australian funds already on
the prowl for property in this country. Both Macquarie Bank
and Babcock & Brown are making up to 20% annual returns
on R/E funds such as Mori Building. ***Ed: Apparently part
of the reason these foreign REITs are landing in Japan is
because they are hoping to snare some of the reported
US$100bn of property that the government is saying it will
sell off over the next few years to reduce government debt.**
(Source: TT commentary from, Dec 5, 2006)

NOTE: Broken links
Many online news sources remove their articles after just a
few days of posting them, thus breaking our links -- we
apologize for the inconvenience.


================= You're Vending What? ====================

Japan is home to the highest density of vending machines in
the world, with about 5.6m machines, or one for every 23
people. You can buy almost anything, and the Japanese do,
with about JPY6.67trn (US$56bn) being spent every year.

Yet, apart from the obvious players such as major soft
drinks companies, there have been no foreign owners of this
massive direct sales medium - until now.

Market Pioneer Japan is proud to announce that as of
October, 2006, it has built a network of 1,000 vending
machines placed nationwide, selling stickers and print
logos. We invite owners of licenceable characters to
contact us with a view to distributing your IP assets into
the Japanese market.

Web: email:



=> The following position is for LINC Media's BiOS Division.
Interested parties should contact:

-> Desk-side engineers
Large multinational bank looking for Desk-side support
engineers to work in their Tokyo office. Must have
experience in Desk-side support, be flexible, and have
strong work ethic. All candidates must have strong command
of written Japanese. Successful applicants will enjoy very
competitive salary and benefits.

Responsibilities will include:
- Level One Support - Troubleshooting PC-desktop problems
- Problem management
- Escalation POC for the Help Desk.
- Installation, troubleshooting, configuring, support of
Win2000/XP desktops
- Testing and evaluation of automated desktop builds
- Software deployments, upgrades, etc.

Required Skills/Experience:
- English/Japanese language ability (Fluent: candidate MUST
have superior written Japanese ability)
- 1+ Years working experience in NT/XP/Windows 2000
- Knowledge of the Microsoft Office product range
- MCSE (Microsoft Certified Systems Engineer) Preferred
- Good communication and organizational skills
- Ability to work well under pressure in large foreign firm

For more information or to submit your resume, please email


No events this week. We guess that everyone is too busy
with work bonenkai!

IT events announcements are priced at JPY50,000 per week.
For more information, contact sales at



In this section we run comments and corrections submitted
by readers. We encourage you to spot our mistakes and
amplify our points, by email, to

-> TT 402 -- SourceNext. We featured an ad (running again
this week as well) for the famous old Fujiya hotel in

*** Our reader says: I enjoyed the section on Fujiya Hotel
at Hakone. Thought you'd like to know that for the budget
minded, there's the Lake Villa Youth Hostel in Moto-Hakone.
They have a small onsen on the premises. You can see how to
get there on the web at For the Hakone listings,
click "kanto" and then "Ibaraki-Tochigo-Gunma." The price
is about JPY3,100 per person per night, with dinner and
breakfast also available. You can get there on the "Hakone
Free Pass" available for the Odakyu line.

*** Our response: Yup, people read the ads! Especially the
Hakone one, since the Fujiya hotel is pretty amazing.
Staying there is one of those great Japan experiences you
never forget.

...The information janitors/


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Written by: Terrie Lloyd (

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I think it is amazing you can write Terries Take every week without fail. Keep up the good work. Please enjoy the holiday season. That said, I expect my weekly dose of Terries Take!!!


Thanks for the kind words. Yeah, the wife and kids know that Sunday from about 17:00 is Daddy's work time. I usually take about 5-6 hours, but if the topic is deep, then there will be a couple of week's advance research and preparation.

I really like doing the newsletter since it's an enforced study period. There are a lot of experts out there and whatever I write about, I have to be sure I got it right.

Best regards,