Japan Digital:Business Culture, Mobile,

Advertising, Games

January 5, 2014

The Hollywood Perspective

Long Duk Dong,“Sixteen Candles”

The Israeli Perspective

The Real Basis for Japanese Culture

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Rice Farming Has Moved to the Office

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Japan viewed by Hofstede’s 5 Dimensions

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- Power distance

- Individualism vs collectivism

- Masculinity vs femininity

- Uncertainty avoidance index

- Long term orientation

Role of the Individual

Japanese ArtworkWestern Artwork

Enormous Generational Differences

20-30 30-40 40-55+

•Digital natives

•Fast moving

•Gentle but risk averse

•Suffering from pension crisis

•Harder to adapt to changing workplace

•Fear becoming oyaji

•Responsibility shy in their private lives

•Fewer getting married

YUTORI Generation

BubbleSedai and upper

LOSTGeneration

AGE

LIFESTYLE

GENERATION

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Japanese young people: Real = Danger

BUBBLE COLLAPSE

KOBE EARTHQUAKE (5 YRS OLD)

STAGNATION & RECESSION

LIFE HISTORY OF A 22 YEAR OLD

EARTHQUAKE, TSUNAMI, Government Failure(21 YRS OLD)

SUBWAY TERROR(4 YRS OLD)

MOBILE VIRTUAL SNS(13YRS OLD)

POKEMON(7 YRS OLD)

SARS EPIDEMIC(12 YEARS OLD)

iMODE MOBILE WEB(8 YEARS OLD)

Self-Expression Platforms

(16 YRS OLD)

Source: Research on 20-year-olds 2010, Macromill

Gen Y: “SOUSHOKU DANSHI”DO YOU THINK YOU ARE A “SOSHOKU DANSHI”?

“Soshoku Danshi” (lit. Herbivore Men):(noun) They are men with gentle hearts. They don’t worry about being “masculine”, or greedily pursue the opposite sex. They are men that dislike being hurt and hurting others.

They are Socializers.Source: Masahiro Morioka “Heisei Danshi Zukan (Guide to Men in Heisei Era)”

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Not a herd, but a swarm

❤❤

❤

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YASHIMA Operation

Softbank

59.62 million(45.7%)

(29%)

(25.3%)

KDDI

■ 128 million subscriptions

Source: Bloomberg Reports, Q3 2013

Japan Operator Market Share (Nov, 2013)

Higher iOS Share than US and growing…

The Future of Mobile?

More Likely THIS the Future of Mobile?

THIS is the Future of Mobile

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THIS is the Future of Mobile

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Maybe, THIS is the Future of Mobile

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Look EAST for the Future of Mobile

Japan 1st market to near saturation

• Media / Video (most popular category)• Photos• Shopping • Lifestyle• Tools

Mandatory tablets in all K-12 classrooms

Japan: Networks Change Behavior

Japan LTE deploymentsAre clustered in Tokyo

Say こんにちは to Phablets

Japan Still World #2 Advertising market

Expenditures by media type and year-on-year growth

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Growth / decline in ad-spend by category, 2010-2012

TotalAd

spend

Newspaper Magazin

eTV Radio Digital Ads

Attention InterestSearch(Gather information)

Share(information)

Action(Purchase)

Consumption Behavior Model

AISAS®

A I S A S

A I D M A

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Media Mix and Cross Media

Media distribution to reach target

Media Mix Cross Communication

Newspaper ads

Magazine ads

Radio ads Outdoorads

Internetads

TV commercials

Creating a scenario for moving the target

新聞広告

ラジオ広告

テレビＣＭ

雑誌記事

交通・屋外広告

交通・屋外広告

コアアイデア

ラジオ番組

Ｗｅｂサイト

携帯電話サイト

店　舗

TV　 commercials

Newspaper ads

Radio ads

Outdoor ads

Magazine ads

Mobile phone site

PC site

Radio program

Outdoor ads

Shops

Core Idea

Japan: Virtual is REAL Commerce

http://www.youtube.com/watch?v=KTA91-2XjDY

Balloon Fishing

http://www.youtube.com/watch?v=j-6jn4Qo76E

Social Gaming Market Size : $5 billion USD in 20132010 2011 2012 2013

Annual Market Size(unit: 100 million Yen)

¥1,064 ¥2,385 ¥3,394 ¥4,135

Market size (monthly) 89 199 283 345

ARPU (monthly) 2365 3775 4635 5510

Paying users (unit: 10,000)

375 527 610 626

Paying Ratio 10% 13% 15.5% 17%

Active Users (unit: 10,000)

750 810 875 920

Active User Ratio 30% 27% 25% 23%

Unique Players (unit: 10,000)

2500 3000 3500 4000

Source: UFJ Morgan Stanley

Japan Social Mobile Gaming Market Drivers

• Carrier billing- integration of virtual wallets into games

• Game friendly society and mobile-centric users

• 99% 3G penetration (since 2010); faster mobile broadband networks

• Integration between mobile and social gaming via SNS

• Social gamers with high disposable income, especially women

• Card Battle games represent 70% of Top 20 games on Gree & DeNA

Biz Models: Social game vs. traditional publishers

Source: Fumi Yamazaki, blog post

2 Closed platforms- DeNA and Gree

Source: Serkantoto.com

Japan-Only Genres: Manga based social games

Bandai Namco: Gundam Royal

Japan-Only Genres: Social RPGs

Japan-Only Genres: Social Dating/ Love Simulation

Special Genres: Social Idol Raising Games

Special Genres: Social Card Battle Games

Monetization: Japan has ¼ of US Google Play downloads but highest revenues in the world

Source: AppAnnie Index, Nov, 2012

iOS: World #2 revenue despite smaller user base

• DoCoMo, Japan’s largest operator, just launched iPhone in October

• Japanese consumers ready to spend for mobile content

• Games account for >80% of revenue in Japan App Store

• Catching up to US- faster growth in Japan

Source : AppAnnie Index, Nov 2012

Source: Mitsubishi Morgan Stanley, 2011

Source: Mitsubishi Morgan Stanley, 2011

Building a Successful Mobile Game in Japan

• Focus on popular genres- RPG (21%) & Romance (18%) popular on mobile

Localized marketing with celebrities and events

Prevent abandonment with easy game-play

Target female players with genre, art & game flow

Simple, colorful and streamlined UI

Foundation

Com

munication M

onet

izat

ion

Concept

Platform

Environment Recurring re

v.

Conditions

Qui

ck w

ins

• Useful• Affordable• Easy to adopt

• Business Critical• Addictive• Intrinsic Value

• Showcase• Conduit• Social

system

• Incentives• Rewards• Cross Sale

• Defined market• Multi-channel• Channel conversion

• Subscription• Upgrade• Scalability

Monetization Hexagon

There Actually IS a formula for Mobile Social Games (FatDux)