Japan Mobile SNS Study 2010

Japan’s Cellphone Edge @ analytica1st.com

Japan Mobile SNS Study

January 2010

mixi

facebook

gree

mobagetown

twitter Yahoo!Days


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Part 1. Japan’s Mobile Phone Market OverviewPart 1. Japan’s Mobile Phone Market Overview


3

Chart 1: J apan Mobile Phone Penetration Rate Aug.2009

14.0

113.7

0%

20%

40%

60%

80%

100%

Total Japan population: 127.7m

Mobile penetration: 89%

Japan’s mobile phone market is in a mature phase The saturation is here with penetration rate standing at 89% The growth is modest with 4% up YoY (Aug. ’08 - Aug. ’09) (see Chart: 3)

Japan is a dominantly postpaid market Just 1.3% of accounts are prepaid and they are decreasing

There are two types of mobile phone standards in Japan: cellular and PHS Among country’s 113.7m wireless subscriptions, 96% account for cellular phones Remaining 4% go to Personal Handy-phone System (PHS)

Chart 2: J apan Mobile Subscriptions by Type, Aug.2009

96%

4%

Cellular

PHS

Total: 113.7m

Japan mobile phone market is well developedJapan mobile phone market is well developed


4

10

20

30

40

50

60

Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09

Chart 3: Mobile Phone User Bases by Carrier, 2008-2009

NTT DoCoMo KDDI au Softbank EMOBILE Willcom (PHS)

(millions)

Source: Telecommunications Carriers Association, August 2009

Last year Japan’s wireless market grew by mere 4%Last year Japan’s wireless market grew by mere 4%


5

Chart 4: Ownership of communications devices by households (% ), 2004-2008

0

20

40

60

80

100

120

2004 (n=3,695) 2005 (3,982) 2006 (n=4,999) 2007 (n=3,640) 2008 (n=4,515)

Mobile phones PSTN phones PCFax Car navi Networked gaming deviceNetworked TV

(%)

Source: Japan Ministry of Internal Affairs and Communications, 2008

Mobile phones, including PHS, are the most owned communications devices In popularity they surpass personal computers and fixed line telephones

Mobile phones outshine landline telephones & PCs in JapanMobile phones outshine landline telephones & PCs in Japan


6

There are three main cellular standards employed in Japan: PCD, CDMA & WCDMA 2G: cdmaOne (a CDMA flavor) and PCD, a home-grown standard vanishing from the scene 3G: CDMA and WCDMA evolutions

Japan cellular phone market has almost completely switched to 3G standards Just about 5% of accounts are still 2G In 3G, WCDMA takes lion’s share as three operators support it vs. single CDMA operator WCDMA operators are NTT DoCoMo, Softbank and eMobile; KDDI au backs CDMA

Data usage is abundant due to high 3G penetration and advanced devices available Among 109m cellular connections, 84.3% have data plans added on

Chart 5: J apan Mobile Standards Shares (%), Aug.2009

5%

67%

28%

WCDMA

CDMA2000 1x

2G (PCD andcdmaOne)

Total cellular: 109m

Chart 6: J apan Mobile Data Subscriptions Aug.2009

91.9

17.1

0%

20%

40%

60%

80%

100%

Total Cellular: 109m

Data penetration: 84.3%

3G penetration stands at 95%, making Japan the leader in 3G3G penetration stands at 95%, making Japan the leader in 3G


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PC & mobile phone users61.9m (68.2%)

4.7m (5.2%)

Mobile phone only8.2m (9.0%)

0.1m (0.1%)Game device/TV only

0.02m (0.0%)

0.7m (0.8%)

PC users82.5 (90.8%)

Game device/TV users5.6m (6.2%)

Mobile Phone Users75.0m (82.6%)

PC only15.0m (16.6%)

Source: Japan Ministry of Internal Affairs and Communications, 2008

In 2008, about 62m users accessed Internet from both PC and mobile phone 82.6% of mobile phone users browsed mobile Internet from their phones in 2008 In 2009, this number increased to 84.3% (see Chart 6)

Chart: 7 Internet Access in Japan by Device Type, 2008

Mobile phones are in the driving seat when accessing InternetMobile phones are in the driving seat when accessing Internet


8

62.5%

60.6%

49.7%

45.0%

44.2%

41.5%

41.1%

40.6%

40.5%

39.0%

36.3%

35.1%

33.7%

30.3%

30.2%

25.8%

23.6%

22.6%

22.6%

20.8%

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00%

Blog

Search

Homepage Building Service

Chaku Uta Full

Idle Screen Customization

Weather

Apps/Games

SNS

News

Web Board

Traffic/Directions

Deco Mail

Chaku Uta

Video Sharing

Manga

Online Dictionary

Horoscopes

Chaku Melo

eBook

Profile Pages

Social networking is on mobile radar but has plenty room for growth

Source: Mobile Marketing Data Labo., Aug. 2009; n=2,010 (multiple responses allowed)

Chart: 8 Japan Internet Services Accessed from Mobile Phone in August 2009

Breakdown of mobile Internet usage in JapanBreakdown of mobile Internet usage in Japan


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Part 2. Mobile Social Networking in JapanPart 2. Mobile Social Networking in Japan


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75.4%

22.2%

2.0%

0.4%

Only from mobile phone

From PC & mobile phone

Only from PC

SNS doesn't support mobile access

When logged in from a mobile phone, almost 60% of users play games

Source: Mobile Marketing Data Labo., Aug. 2008; n=3,880

Most users access social networks from mobile Most users access social networks from mobile


Chart: 9 Access methods of social networks in Japan

68.0%

58.4%

55.9%

49.4%

36.3%

30.8%

29.9%

16.3%

11.6%

3.7%

0% 20% 40% 60% 80%

Check inbox, visitors

Play games

Read friend's blog

Update own blog

Read news

Check community updates

Send messages

Update profile

Update photos/videos

Invite friends

Chart: 10 Main SNS features used on mobile phone


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Social network user demographics skew toward female users


Japan’s social networking demographics Japan’s social networking demographics

56.2%

17.5%

17.0%

9.3%

Using at present

Registered but not using at present

Not using but have heard about it

Don't know what SNS is

Chart 12 SNS usage among male users

51.2%

19.5%

18.5%

10.8%

Chart 13 SNS usage among female users

61.2%16.5%

14.5%

7.8%



Chart: 11 SNS usage / awareness in Japan


12

68.2%

59.5%

56.2%

48.6%

44.1%

41.6%

39.8%

35.1%

24.1%

22.3%

9.8%

7.4%

6.5%

3.5%

2.8%

0.0%

0.0%

12.7%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Blog

Games

Messaging

Avatars

Communities

Circles

Profiles

News

Albums

User search

Videos

Deco mail

Reviews

Calendar

RSS

Introduction templates

Visitor tracking

Other

Among most used features are blogging, gaming and messaging


Chart: 14 Features most used on social network sites (including both PC and mobile phone users)

Social networks attract users by multiple featuresSocial networks attract users by multiple features

Good selection of games is an important attribute of successful

social network in Japan


13

68.4%

53.5%

43.0%

9.3%

7.8%

5.7%

4.8%

4.4%

3.9%

2.9%

2.6%

2.5%

2.4%

2.2%

1.9%

1.1%

0.9%

0.3%

0.3%

19.6%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0%

mobage town

mixi

gree

puchige friends

ixen

fans street

nani suru.jp

rogotomo

mobarebo

myMTV

chibuya town

gocco

any

yahoo!days

cafesta

amie

my space japan

cyworld

facebook

Other

Late coming and lack of relevant local offering keep global brands at bay in Japan


Chart: 15 Mobile Social Networks Accessed In Japan, 2008

Home-grown social networks rule in JapanHome-grown social networks rule in Japan

43.3%

40.8%

29.6%

3.5%

2.6%

1.5%

1.1%

0.9%

0.7%

0.6%

0.0%

5.6%

29.3%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0%

mobage town

gree

mixi

puchige friends

style walker

yahoo! days

gocco

ekimoba

twitter

any

actibo

other

don't use

Chart: 16 Mobile Sites Used for Communication, 2009

Source: Cross Marketing, Sep. 2009; n=2,993

Foreign players struggle to get footing in Japan

Big three dominate the social networking

marketplace in Japan


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Chart 17: Twitter user dynamics in US, UK & Japan, Jan-Apr 2009

4,5567,038

13,858

17,082

6851,789 2,397 2,515

200 239 357 52102,0004,0006,0008,000

10,00012,00014,00016,00018,000

Jan-09 Feb-09 Mar-09 Apr-09

USUKJapan

Twitter in Japan: growing but yet to make an impactTwitter in Japan: growing but yet to make an impact

Japan USA UKUsers 520,000 17,080,000 2,520,000Reach (of all Internet users) 0.90% 10.20% 6.80%Average access rate 3.4 times 3.5 times 4.3 timesAverage time spent 4.57min 17.33min 27.19minGender demographics (male : female) 75% : 25% 45% : 55% 46% : 54%

Twitter’s reach in Japan is comparatively low but with such personalities like Japan’s prime minister Yukio Hatoyama joining the service it can get more traction

By now, Twitter in Japan is high-jacked by the male audience (75% of Twitter users)

Table 1: Stats of Twitter usage in Japan, US & UK, April 2009

Source: http://www.netratings.co.jp/New_news/News05272009.htm


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Chart 18: Visitors to Facebook Japan ('000), 2008-2009

355 346 280417

638 573445 499

836 767879

1,2171,391

0

200

400

600

800

1,000

1,200

1,400

1,600

Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09

Facebook in Japan: relying on organic growthFacebook in Japan: relying on organic growth

Having started offering localized home page in May 2008, Facebook relied on organic growth in Japan reaching out to 2.3% of Internet users by November 2009

Lack of localized apps makes Facebook less appealing compared to mixi and likes

Table 2: Facebook Japan vs. Facebook USA and mixi Japan, November 2009

Source: http://csp.netratings.co.jp/nnr/PDF/Newsrelease12242009_J.pdf

Facebook Japan Facebook US mixiVisitors 1,390,000 109,710,000 9,200,000Reach (of all Internet users) 2.30% 56.20% 15.20%Average access rate 3.4 times 19.3 times 18.7 timesAverage time spent 36.7min 6hr 10.6min 4hr 32.52minGender demographics (male : female) 56% : 44% 44% : 56% 48% : 52%Application usage 7.30% 57.60% 50.20%


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14.9

10.78

5.54

15.12

11.03

5.9

15.4

11.42

6.26

15.68

11.64

6.7

15.91

11.86

7.16

16.11

12.08

7.59

16.3

12.34

8.02

16.48

12.94

8.49

16.62

13.44

9.01

16.83

13.83

9.86

17.02

14.19

10.57

17.23

14.48

11.63

17.41

14.69

12.6

Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09

Chart 19: User bases of big three compared: mixi, mobage town, gree (2008-2009)

mixi mobage town gree

(millions)

Source: Companies’ reporting numbers

Mixi is a leading social networking site in Japan by user baseMixi is a leading social networking site in Japan by user base


17

7.1%

Mobage Town

Gree

mixi

18.2%

Source: Mobile Marketing, March 2008; n=352

About 30% of respondents reported actively using multiple mobile social networks

Chart: 7 Mobile social network member overlap

Mobile social network membership overlap is common in JapanMobile social network membership overlap is common in Japan

6.8%

7.1%4.8%

10.5%

13.9%


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4.32

10.69

3.87

9.76

4.25

11.1

3.97

10.49

4.28

11.41

4.07

10.99

4.08

11.49

4.09

11.93

4.52

11.44

Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09

Chart 17: mixi page views by access platform: mobiles vs. PCs, 2009

PC Mobile

(billions)

Source: Company’s reporting numbers

Marketers must target mobiles as the main vehicle for serving adsMarketers must target mobiles as the main vehicle for serving ads Mixi and other social networks in Japan get most page views from mobile phones


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Mobage Town is a game-centric social network with a focus on delivering fun and entertainment experience

Mixi is focusing on creating the value of communication among real life friends through social apps and games

Gree is a virtual online community where users can socialize with each other through avatars, play games and earn or buy virtual goods

Differentiation strategies of big three social networks in Japan Differentiation strategies of big three social networks in Japan

Entertainment-centric

Communications-centricmixi

mobagetown

gree

Availability of games and entertainment content is pivotal for success of SNS in Japan Big three are in the race to match up each other offerings; In Japan, real user identity is often hidden behind the virtual avatar

Chart: 20 Brand positioning of big three in Japan


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Mobage demographics: games appeal to younger male audience Mobage demographics: games appeal to younger male audience

By gender

By age

47.9%

52.1%60.0%

40.0%

53.0%

47.0%

Female

Male

mixi mobage town gree

9.4%

53.8%

27.3%

7.4% 2.1%

Age 10~19

Age 20~29

Age 30~39

Age 40~49

Age 50

31.0%

43.0%

26.0%

Age 10~19

Age 20~29

Age 30+

24.0%

36.0%

25.0%

15.0%

Age 10~19

Age 20~29

Age 30~39

Age 40+

Source: Company’s reporting numbers


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Mobage town offerings at glance Mobage town offerings at glance

Source: Company


22

mixi offerings at glance mixi offerings at glance

Source: Company


23

Social network revenue model: Gree primerSocial network revenue model: Gree primer

Source: Company


24

Premium content and ad sales equally contribute to revenuePremium content and ad sales equally contribute to revenue

Source: Company

mobage town sales breakdown


25

Near future outlook: opening APIs and luring developersNear future outlook: opening APIs and luring developers

Source: Companies

Battle for developers’ mindshare begins: availability of third-party applications will become a competitive advantage for social networks in Japan Mixi payment program for developers provides advertising vehicles,

billing, consulting help and 80% cut of revenue generated by application Mobage Town: providing OpenSocial-based APIs for social gaming

Technology

Japan Mobile SNS Study 2010