Japan Digital jan 2014: Business Culture, Mobile, Advertising & Games
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  • Until WWII, 45% of Japan worked in agriculture, mostly in rice cultivation. Until mechanization in the 1970’s, this is the way rice was cultivated in Japan.
  • For an Israeli, the culture differences would include:A higher power-distance: Israeli hierarchical structures are normally quite flat and it is expected that everyone has a voice, contributes to decisions, and so on. This is reflected by the Israeli habit of questioning and criticising superiors openly, and expecting that leaders are visible and accessible. Although Japan does not score as high as other Asian countries in power-distance, to an Israeli the difference will be striking since: hierarchical positions have a far greater importance than they are normally used to (more on this in later posts), decisions are less democratic, wage differences are greater, and so on.A lower degree of individualism: Although the Japanese national culture scores moderately in this area (and demonstrates some tendencies towards both individualism and collectivism), an Israeli will find the Japanese to be more group-oriented and place more emphasis on harmony of the group. This is also reflected in the communication style, where the Israelis are far more direct, highlighting the wants and needs of the individual in what is said. By contrast, the Japanese will be more indirect, due to a reluctance to affect group harmony.A far higher degree of masculinity: This is the most striking difference. The Israeli society is one of the most feminine, emphasising quality of life, involvement, equality, and compromise. By contrast, Japan is extremely competitive (usually on a group level). This is something that is fostered from a very young age and serves as the main motivational factor in business, while in Israel motivational factors include free time and comfortable living. Striving for excellence is at the core of Japanese values.A far higher degree of uncertainty avoidance: This is another area where the differences are extremely pronounced. With a low uncertainty avoidance index, the Israelis are comfortable in uncertain situations. They accept that things change and incorporate them easily into their work routines and so on. Furthermore, there are fewer rules and the work situations are less structured. Japanese national culture is exactly the opposite. The Japanese have an aversion towards ambiguity and emphasise structure and codes of behaviour. Managers are interested in all the facts and figures, and a lot of effort is put into feasibility studies (etc.) in an effort to identify and eliminate risk factors.A higher degree of long term orientation: Japan is a long-term oriented society, which looks at the bigger picture and views an individual’s life as a short moment in time. In business, this translates to a far higher focus on long term investment (e.g. in R&D) rather than short-term profits. In Western countries, including Israel, the focus tends to be more towards the short-term. Often, our business models, which require maximisation of stakeholder profits, do not allow for the same long-term focus that is common in Japan (i.e. our managers tend to get fired if they do not produce short-term results).
  • In Japanese art, the person is not the central theme. Much more important is the broader context, the role of nature and how people fit within that larger whole. Contrast that with Western art, in which the individual is the most prominent attribute.
  • It is important to recognize that Japan is the oldest society in the OECD. With a birth rate of only 1.3 children per couple and the longest life expectancy in the world, more than 20% of the population is over the age of 65. Between 1946 and 1991, Japan achieved continuous GDP growth. The only exceptions were the Oil Shock years of 1973 and 1979. The demographic challenge currently confronting Japan’s growth is how to support the older generation with a shrinking labor pool.
  • Japanese born 22 years ago will have known economic stagnation for the entirety of their lifetime. Moreover, a series of natural and human disasters, coupled with government paralysis, has shaped their impression of the real world. Contrast that with experiencing the transition from offline social experiences as children, such as Pokemon and Tamagochi, into online social experiences. Unlike their peers in the US, Japanese have enjoyed the connected lifestyle since DOCOMO was the first carrier in the world to roll out 3G with their iMode mobile operating system. More recently, self-expression platforms like Ameba and now Twitter enable Japanese to share their inner feelings in a socially acceptable way. Japan is #2 in the world for per capita blog usage (Comscore).
  • Masayoshi Son, founder of Softbank. In the 90’s, he invested in offline publishers. Later he acquired major portals, wireless carriers and companies that could expand his footprint in China. In the last 6 months, Softbank has made two acquisitions for mobile social game publishers, Gung Ho and Supercell, both of which valued the acquired companies at more than $3 billion USD.
  • Supercell is a games business with just two titles, Clash of Clans and Hay Day, which until last week could only be played on Apple's iPhone and iPad. Japan's Softbank paid $1.5bn to acquire a 51% stake in Supercell and integrate with its own publisher, GungHo, maker of Puzzles & Dragons. Launched in 2011, Supercell revenues grew from $100m in 2012 to $179m in the first quarter of this year and are on course to hit $1bn for the whole year.
  • Colopl is a mobile social game publisher.Their title Quiz RPG: Wizard & Wiz the Black Cat, is a mix between quiz game and RPG,with more than 10 million downloads in Japan alone and a market cap of 3.2 billion USD.By way of comparison: social gaming behemoth GREE is currently listed with US$1.9 billion. DeNA stands at US$3 billion.So Colopl’s market cap is now higher than that of GREE (over 40 million registered users in Japan) and DeNA (over 50 million users). 
  • Line makes messaging social, with pictogram-based communication. Users purchase stickers to enhance their own self-expression.
  • Tokyo Girls Collection began as a mobizine in which the community uploaded photos of fashionable women, editors tagged the clothing with QR codes, enabling readers to make purchases directly from their phones. Today, mobile and offline commerce are blended with an offline fashion show format designed to encourage online fans to make purchases.
  • What happens wheneveryone who is likely to is carrying at least one smartphone or tablet? Japan has a lower penetraton than Korea but it is concentrated in the Tokyo region. In Korea, as in the US, 96% of the apps available through the T Store – are free. NFC is prevalent in connected devices, allowing for innovations across devices. For example, SK Planet has a mobile payment system called T Cash, which is used for 54% of in app purchases, and also can be used to pay for off-device transactions such as train and taxi fares. Interestingly, another third of in app purchases are paid for using gift certificates, demonstrating the potential of mobile devices as a mechanism for giving and receiving gifts.

Transcript

  • 1. January 5, 2014 Japan Digital: Business Culture, Mobile, Advertising, Games
  • 2. The Hollywood Perspective Long Duk Dong, “Sixteen Candles”
  • 3. The Israeli Perspective
  • 4. The Real Basis for Japanese Culture 4
  • 5. Rice Farming Has Moved to the Office 5
  • 6. Japan viewed by Hofstede’s 5 Dimensions - Power distance - Individualism vs collectivism - Masculinity vs femininity - Uncertainty avoidance index - Long term orientation 6
  • 7. Role of the Individual Japanese Artwork Western Artwork
  • 8. Enormous Generational Differences 20-30 30-40 YUTORI Generation LOST Generation Bubble Sedai and upper • Digital natives • Fear becoming oyaji • • Fast moving • • Gentle but risk averse Responsibility shy in their private lives Suffering from pension crisis • Harder to adapt to changing workplace AGE GENERATION 40-55+ LIFESTYLE • Fewer getting married 8
  • 9. Japanese young people: Real = Danger LIFE HISTORY OF A 22 YEAR OLD KOBE EARTHQUAKE (5 YRS OLD) POKEMON (7 YRS OLD) MOBILE VIRTUAL SNS (13YRS OLD) EARTHQUAKE, TSUNAMI, Government Failure (21 YRS OLD) SUBWAY TERROR (4 YRS OLD) iMODE MOBILE WEB (8 YEARS OLD) BUBBLE COLLAPSE SARS EPIDEMIC (12 YEARS OLD) Self-Expression Platforms (16 YRS OLD) STAGNATION & RECESSION
  • 10. 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)” Source: Research on 20-year-olds 2010, Macromill 10
  • 11. Not a herd, but a swarm 11
  • 12. YASHIMA Operation 12
  • 13. Japan Operator Market Share (Nov, 2013) ■ 128 million subscriptions Softbank (25.3%) KDDI (29%) Source: Bloomberg Reports, Q3 2013 59.62 million (45.7%)
  • 14. Higher iOS Share than US and growing…
  • 15. The Future of Mobile?
  • 16. More Likely THIS the Future of Mobile?
  • 17. THIS is the Future of Mobile 17
  • 18. THIS is the Future of Mobile 18
  • 19. Maybe, THIS is the Future of Mobile 19
  • 20. Look EAST for the Future of Mobile
  • 21. Japan 1st market to near saturation • • • • • Media / Video (most popular category) Photos Shopping Lifestyle Tools Mandatory tablets in all K-12 classrooms
  • 22. Japan: Networks Change Behavior Japan LTE deployments Are clustered in Tokyo
  • 23. Say こんにちは to Phablets
  • 24. Japan Still World #2 Advertising market Expenditures by media type and year-on-year growth 24
  • 25. Growth / decline in ad-spend by category, 2010-2012 Total Ad spend Newsp aper Magazin e TV Radio Digital Ads
  • 26. Consumption Behavior Model AISAS® A I D Attention InterestSearch M A Action Share (Gather (Purchase) (information) information) A I S A S 26
  • 27. Media Mix and Cross Media Media Mix Cross Communication Media distribution to reach target Creating a scenario for moving the target Core Idea TV commercials TV commercials Newspaper ads Magazine ads Newspaper ads Outdoor ads Radio program Radio ads Radio ads Outdoor ads Internet ads Outdoor ads Magazine ads Shops PC site Mobile phone site
  • 28. Japan: Virtual is REAL Commerce http://www.youtube.com/watch?v=KTA91-2XjDY
  • 29. Balloon Fishing http://www.youtube.com/watch?v=j-6jn4Qo76E
  • 30. Social Gaming Market Size : $5 billion USD in 2013 2010 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
  • 31. 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
  • 32. Biz Models: Social game vs. traditional publishers Source: Fumi Yamazaki, blog post
  • 33. 2 Closed platforms- DeNA and Gree Source: Serkantoto.com
  • 34. Japan-Only Genres: Manga based social games Bandai Namco: Gundam
  • 35. Japan-Only Genres: Social RPGs
  • 36. Japan-Only Genres: Social Dating/ Love Simulation
  • 37. Special Genres: Social Idol Raising Games
  • 38. Special Genres: Social Card Battle Games
  • 39. Monetization: Japan has ¼ of US Google Play downloads but highest revenues in the world Source: AppAnnie Index, Nov,
  • 40. 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
  • 41. Source: Mitsubishi Morgan Stanley, 2011
  • 42. Source: Mitsubishi Morgan Stanley, 2011
  • 43. Building a Successful Mobile Game in Japan • Focus on popular genres- RPG (21%) & Romance (18%) popular on mobile
  • 44. Localized marketing with celebrities and events
  • 45. Prevent abandonment with easy game-play
  • 46. Target female players with genre, art & game flow
  • 47. Simple, colorful and streamlined UI
  • 48. • Useful • Affordable • Easy to adopt Monetization Hexagon • Business Critical • Addictive • Intrinsic Value Platform • Showcase • Conduit • Social system • Defined market • Multi-channel • Channel conversion Quick wins Foundation • Incentives • Rewards • Cross Sale • Subscription • Upgrade • Scalability
  • 49. There Actually IS a formula for Mobile Social Games (FatDux)