Are You Official? - The Life of a Mobile Content Provider In JapanM for Mobile (イギリス)
The diaries will now attempt to throw light onto the life of Japan’s mobile Internet content providers. By GoCapital CEO Julian Lai-Hung
One key element of NTT DoCoMo's 'positive feedback cycle' is an environment where content providers can make money through micropayments that are added to your monthly mobile phone bill. The fact that content providers make money means that they are motivated to innovate and produce better quality content. Better quality content means more users, which makes the operators happy and so on in the circle of mobile content life.
Even outside this cycle, since the content is relatively easy to produce, there are also many so-called 'unofficial' sites, in fact more than official sites, over 40,000 versus 1,600 official sites. The 'unofficial' sites can still make money through third party billing systems, mobile advertising, and as part of a cross-media strategy, however most do not. This motivates many of the most ambitious content providers to graduate to the official content world.
Nevertheless, making this transition is not straightforward and not even a guarantee of success. We interview Neeraj Jhanji, CEO of imahima.com ('imahima' means 'are you free now?') a successful mobile buddy location service that has managed to make the transition from unofficial I-Mode site to official I-Mode site.
With a 30 million user strong mobile Internet market the eyes of the world content industry are on Japan - how difficult is it to really access those 30 million users?
It is not as difficult as you may think. With over 30 million users, the ratio between available sites and the available viewing population is very good. The ratio is good enough to sustain a mobile content business and there are many opportunities to attract traffic. This audience is also used to making micropayments. All these factors mean that it is an exciting place to be for an entrepreneur.
For the same reasons, brands that are strong in the PC-based Internet world are at a disadvantage because they always have the PC-based user in mind. Amazon and Yahoo are weak in the mobile space because in Japan there is not so much crossover between the PC and mobile world. It is much easier for a mobile venture to think how users can be served in the PC world once they are a customer in the mobile world.
For example, instant messaging is much more powerful in the mobile world since customers want to know where their friends are and the mobile gives them more chance of discovering that compared with PC-based instant messaging.
How difficult is it to actually get listed on the official mobile content menus in Japan?
Very difficult ! The sales process for us was approximately one year. Considering we already had a very successful unofficial content site, I consider this to be very long. We found NTT DoCoMo to be very bureaucratic and slow in their decision-making process. This is something that needs to improve.
In addition, NTT DoCoMo exercises tremendous editorial power over what we can and can't update our site with. This inevitably adds to the difficulty of presenting a dynamic site. As a start-up content company, we were in a very weak negotiating position, almost all content providers are weak compared to DoCoMo.
Having said that, we do have a rather unique application compared to something like a news site and therefore we had to factor in the time it took for us to educate DoCoMo as to our content and the benefits of having it on the official menu.
As a content provider, is dealing with DoCoMo difficult?
As I mentioned, Yes. However I would say that it is understandable in the sense that they need to ensure that the experience for the user is of sufficient quality. They certainly succeed in making sure each content provider presents a plan that is well-thought out and detailed. The point is that the mobile user may have never been exposed to the Internet before and therefore needs a quality experience when they use the I-Mode service.
I have found working with the other operators similar however I would say J-Phone is more flexible. KDDI is also more flexible in the sense they allow things like Dating-type applications which DoCoMo shys away from.
What do you think of recent government moves to ensure DoCoMo makes the listing process more transparent and efficient?
Well, it is necessary in my opinion however do I believe this will happen anytime soon? No, because DoCoMo is too strong. In terms of opening up the official content lists, I believe in the concept of an organising I-Mode portal. Since users do not use their phones to browse the Internet in the same way that a PC-based users does, it must be easy for them to find the content that they need very quickly.
In our view, the average user only accesses for a few minutes per day and only has about 2-3 sites that they use on a regular basis.
Is a listing on the official content menu of one of the mobile operators a guarantee of success?
No. As I mentioned before, since the user does not browse extensively, being on the official listing does not guarantee success in spite of the micropayment advantage.
As an unofficial site, we managed to achieve up to 1 million page views through attracting users through traditional means.
If this is the case, how do users get to know about your site?
As a start-up we used guerilla marketing, word-of-mouth, features online, in the press and TV. Traditional means of promoting yourself are key.
Will entertainment continue to be a key driver of usage?
Entertainment is good because it allows the operator to really use the technical features of the phone, users enjoy it and the operators have been very keen to attract entertainment content. We have not pursued it so actively since it is very difficult to compete with the more established entertainment brands.
How many companies in Japan are actually making money from providing pure mobile content?
I don't know. There are certainly some companies out there not making money is all I can say. I don't have any statistics and data to back this up however.
Many people talk of the need to convince businessmen to use the mobile Internet more actively in order to maintain the impressive growth in users seen so far - do you agree with this assumption and if so, how can business use be stimulated?
Business applications have not been very present on official menus so far, however it is an important mobile application. This is an area where the big systems integrators and IT companies are strong and it is difficult for a niche startup to compete. I-mode has been positioned as a consumer product to date and the official menu approach may not be the best business model. Business applications should be treated separately.
How did you first conceive the imahima concept?
I came to Japan in 1995, working for Andersen Consulting on Internet strategy consulting projects. I asked myself as an entrepreneur, where can I best utilise my creativity and abilities?
One lonely Saturday afternoon I wanted to go out and eat, and looking at the crowds of people outside I wondered 'are any of these people my friends who would join me for lunch?' I then thought that since everyone has a mobile it would be a great way of finding friends.
Two or three months later, I had a patented Beta application. I continued to believe in the concept and develop it. Today, we have over 250,000 users, 20 staff and are now an AOL-Time-Warner funded venture.
The latest version of our imahima application is available on the official menus of DoCoMo, J-Phone and KDDI for 100 yen per month and we are considering plans for European expansion with a recently opened office in Germany.
What are the current challenges facing imahima?
The major challenge we are facing is the typical fast growth strains of a startup venture. In addition, the key thing that I am facing is that without Global Positioning Technology, our service still doesn't allow you to find your friends with pinpoint accuracy.
How do you see imahima developing in the future?
We are open to partnership discussions to any interested parties who may have a fit and we are also looking to fully utilise the benefits of GPS when this becomes available.
How do you address users concerns over privacy and sharing of data on people's movements and interactions?
The key to privacy concerns is trust. We need to win the trust of our customers and keep their belief in the service. We do not initiate any advertising from the imahima site onto users and since the users only declare their whereabouts to a chosen group of friends we are giving the user choice about who he or she shares their location data with.
What do you see as the key misunderstanding that people have about the Japan market?
The strongest message I have is that being on the official menus is not the be-all and end-all of existence. There are costs associated with being on the official menus and it is sometimes difficult dealing with the operators. We achieved strong user growth as an unofficial site and it is not clear to me that my users have grown simply because of being on the official menu. The users will grow if they know about your service and it is a good one.
- Julian Lai-Hung, CEO, GoCapital.com