Japanese mobile users can receive media content -- news and information in the form of text, images and video -- delivered direct to their phones, and they access media while mobile in large numbers. In a July 2003 survey, Tokyo-based mobile ad agency D2 Communications, a joint venture between mobile carrier NTT DoCoMo and advertising giant Dentsu, found that about 84 percent of i-mode users subscribed to some form of mobile news service. As of late March there were just over 41 million i-mode users in Japan (out of a total population of more than 127 million), implying that a staggering 34.7 million i-moders are now receiving news via mobile technology. And that's just among NTT DoCoMo customers; competitors KDDI and Vodafone have millions more mobile Internet users. Mobile media users are also generating strong profits for at least some media houses, primarily those that have opted to create subscription news channels. The Asahi Shimbun is making well over $1 million per month on wireless content and others are trying hard to catch up. What lies at the heart of this growing mobile media success story? For a start, look no further than the terminals, widely considered to be the world's best. Mainstream, made-in-Japan keitai feature cutting-edge technologies such as high-resolution liquid crystal displays, CD-quality audio player chips, fast and large solid-state memories, removable memory sticks, multitasking microbrowsers, and Java application processors -- artfully integrated into superb, ergonomically optimized connectivity tools. And since December 2003 some Japanese cell phones can also access terrestrial TV and FM broadcasts, offering even more options for receiving news and media content. These tiny, perfect phones can log onto central content portals, such as i-mode, EZweb and Vodafone live, and plug into constantly updated news, pictures, weather, sports, headlines and other information provided by a host of third-party media outlets. And thanks to the central coordination and technology control exerted over the terminal manufacturers, the content providers and the networks by Japan's carriers, this media content is virtually guaranteed to download to the phone and display or playback correctly the first time and every time. The high-speed, third-generation (3G) networks launched in 2001 and 2002 merely make the experience better, faster, and cheaper. Key business plan decisions made Media houses, cellular carriers and content providers overseas are starting to pay more attention to the technologies and business models that make mobile media increasingly successful in Japan -- or at least they should be. Now that carriers such as AT&T Wireless, Verizon and Sprint in the United States and Vodafone, Hutchison 3 and T-Mobile in Europe are launching or ramping up their speedy third-generation (3G) networks, they have a rare, second chance to get a higher-speed version of the mobile Web right. To do so, those outside Japan should note that in addition to technology decisions, Japanese carriers also made key business model decisions which helped determine the ultimate success of Japan's mobile Internet. For one, they allowed their wireless Web services to be open platforms so that any handset could access any properly formatted HTML Web site on the public Internet -- although the URL had to be typed in or delivered to the phone as a link embedded in an e-mail message. Also, carriers chose to bill by the packet and set arbitrarily low packet fees (hardly one penny per 128-byte packet on second-generation i-mode, for example), with the result that mobile Web users initially tended not to self-meter or limit usage as they still do today -- to the consternation of many a bill-paying parent. It costs about 2 cents to send an e-mail, perhaps 3 cents to access a heavy Web page, and a few tens of yen to download even large Java applications such as games or mail readers. These business model decisions have resulted in the development of a huge unofficial content ecosystem which drives well over 60 percent of the data traffic and carrier packet revenues. NTT DoCoMo says that on i-mode there are 4,100 official content sites but approximately more than 70,000 unofficial ones. Every packet that zips to or from a phone -- whether connecting to an official or unofficial site -- earns revenue for the carriers.
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"Traditional newspapers have a big advantage in presenting long stories, analyses, charts, and graphics, while mobile has good advantages for quick delivery." -- Yutaka Hashimoto, G-Mode general manager for overseas business |
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On DoCoMo's 2G i-mode network, the average revenue per user (ARPU) is about $70, with $20 coming from data usage and $50 from voice. On the 3G system, the ARPU is closer to $90, with some $30 coming from data and $60 from voice.Carriers can also disclaim all responsibility for the unofficial content, which largely comprises adult-oriented "deai" matchmaking sites and other services that would cause a PR meltdown if spotted on the official menus. By contrast, media content sites operated by newspapers like the Asahi and broadcasters largely stick to the official portals since the carriers' billing systems provide a handy and cheap way to earn substantial content access revenues (either subscription- or per-download-based). Promotion attracts subscribers And while the systems are open, the default menu is reserved for official content partners. Naturally, i-moders most often check this menu when first logging on. Further, they can opt-in to receive regular e-mail updates regarding new and renewed official sites and services issued free of packet fees via the Tokusuru ("beneficial") menu operated by D2 Communications on behalf of DoCoMo, or they can access the "Weekly i-Guide." Many content owners have said that these two forms of promotion are among the best for getting lots of new subscribers. Competitors KDDI and Vodafone Japan have similar services and free-access menus operated by their partner ad agencies. Today, Japan's wireless Internet services have grown into sophisticated multimedia content delivery channels. Web, Java and streaming video form the mainstream technologies supporting mobile media distribution. One of the more interesting services is the M-Stage platform operated by NTT DoCoMo. The service started offering video clip content in December 2001. Clips are delivered via true streaming based on the MPEG-4 format, similar to that used for recording video files to DVD discs. The clips typically run for 3 minutes and users pay anywhere from $3 to $9 per month, or 50 cents per two hours, plus subscription and airtime fees to DoCoMo (no packet fees here). Originally, subscribers accessed the service using dedicated terminals or data cards and PDAs that connected via DoCoMo's 64-kilobit-per-second Personal Handyphone (PHS) network, a sort of cellular-lite system that operates in parallel to the carrier's fully cellular 2G voice network (which also delivers i-mode data).
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