WW-105 -- Mobidec 2003 -- Is the Japanese Content Market Still Growing?

J@pan Inc presents the Wireless Watch Newsletter:


Commentary on the Business of Wireless in Japan

Wireless Watch Newsletter
Commentary on the Business of Wireless in Japan
Issue No. 105. Tokyo. Tuesday, September 2, 2003

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++ Viewpoint: Mobidec 2003 -- Is the Japanese Content Market Still Growing?

The Entrepreneur Association of Tokyo - Our September seminar will
feature Caroline Pover, founder of Alexandra Press, Being A Broad,
and Go Girls, and Yuriko Miyazaki, founder of Krene Inc and vice president
of Go Girls. Both will be sharing their experiences on starting businesses
in Japan and how they overcame the obstacles that stood in their way.

Date: Tuesday September 9th, City Club of Tokyo Maple Room
(Canadian Embassy Complex) Language English
http://www.ea-tokyo.com E-mail: info@ea-tokyo.com


Date: Sept. 19, 2003
Location: JETRO BSC Hall, Akasaka Twin Tower Main Building
Organized by: LINC Media Inc., Japan Inc. Communications KK
(publisher of J@pan Inc magazine) and the Shizuoka
Prefectural Government. We are pleased to present the second
of our ongoing program of cost cutting seminars for foreign
managers. Our keynote speaker is Mr. Andrew Fried, a
partner with IBM Business Consulting (previously PwC).

View complete Seminar information at: http://www.japan.com/shizuoka/
Registration fee: free of charge

++ Viewpoint: Mobidec 2003 -- Is the Japanese Content Market Still Growing?

Last week we stopped in at Tokyo's Mobidec 2003, the annual conference
targeting the Japanese mobile content industry. Each year, guest
speakers from the three Japanese carriers update content providers on
their roadmaps and business plans for the year ahead.

We've attended quite a few European conferences over the past three
years, but we've never seen as many attendees as were gathered here in
Tokyo last week. Content providers, handset manufacturers, technology
suppliers and carriers were all well-represented. It was an excellent
forum for old-fashioned networking and getting the very latest
inside information about the mobile industry.

As he usually does, Takeshi Natsuno, DoCoMo's director for i-mode business,
gave a stirring and inspiring talk. He understands that attractive content
and applications are required to stimulate future growth of the mobile
Internet, and he provided some insight into the actual usage of i-mode.
In December of last year, for example, 52.9 percent of the active i-mode
userbase paid for content, and those who paid for content subscribed to
2.5 paid sites on average.

"There is still space for growth," Natsuno notes, "as about half of the
people with an i-mode phone do not subscribe to paid content sites."

At the end of August there were almost 40 million i-mode subscribers,
of which 2.7 million have the latest 505-series phone. The 505-series
will be the last i-mode PDC phone (2G). From next year, all i-mode phones
will be 3G, and the i-mode business department will merge its activities with
the FOMA-team.

Natsuno has therefore started promoting FOMA as well. "A major concern for
i-mode users is the fee for data traffic," he says. "FOMA therefore
provides an incentive to those worried about rising packet fees, because
the packet fees are only one-sixth what they are for 2G."

Natsuno further stressed the growth of i-mode in Europe. For
instance, Bouygues Telecom is doing relatively well in comparison with
the KPN group companies. As of July, Bouygues had 235,000 i-mode
subscribers with a data ARPU from i-mode just below 10 Euro. (As we
reported last week, the KPN group had signed up 400,000 subscribers
in August who spend on average between 6 and 8 Euro per month.)

According to Natsuno, Japanese content providers have a bright future,
and his skillful presentation at Mobidec last week was quite convincing.
More companies are becoming profitable, and the start-ups from the late
90s are now respected companies.

Last week, however, several leading content providers announced their
results for the quarter ending June 30. Ordinary profits plunged because
of decreasing numbers of subscribers and the growing costs involved in
producing content for new technologies such as BREW and Flash.

Mobile phone users are also tending to use less pay content; they can
enjoy themselves with picture messaging and other new features
offered by the latest phones. Cybird's ordinary profits dropped by
61 percent, while Gigno System's profit fell by 4 percent in comparison
with the same quarter last year. Wallpaper provider Digital Adventure was
more successful -- it was profitable this quarter, while it was in the
red last year.

Growing competition and investments in new technologies make it more
difficult for the leading content providers to maintain steady double
digit growth numbers. The leading companies are increasingly diversifying
their businesses into m-commerce and broadband. It might be time for a
consolidation wave, as economies of scale will be important to reduce
the production of content.

-- Arjen van Blokland

Date: Nov. 19-21, 2003
Location: Le Meridien Grand Pacific (Odaiba, Tokyo)

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Written by Arjen van Blokland; edited by the
J@pan Inc staff (editors@japaninc.com)


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