Asia’s Best of Breed | Mobile Ecosystems, SNS & More
Benjamin Joffe, CEO | Plus Eight Star | eComm - 2009.03

Benjamin Joffe
ベンジャミン
벤자민
本杰明

4 years
1 year
4 years

www.plus8star.com

Cross-Market Consulting
Telecom & Internet Innovation
China | Japan | South Korea

26 events | 98 speakers | 3,296 members | 1,440 companies

I am going to talk about
iPhone
Facebook
Asia
SMS
Mobile ecosystems
Mobile music
Mobile social networks
for 20 minutes

Social games
&
iPhone games

0.
Irrelevant or Copycat?

Internet Mobile
1.3 billion 3.3 billion
(Asia = US + Europe)
Source: Morgan Stanley, 2007

General assumption #1
great
Everything from USA is

General assumption #2
weird
Everything from Asia is

General assumption #2
weird
Everything from Asia is
(and sometimes funny)

Japanese like texting on mobile
Because they have small fingers
Anonymous manager at a telecom company in 2000

Asians like avatars
Because they read mangas and watch animes
Anonymous manager at an Internet company in 2005

Chinese like ring-back tones
Because they go to karaoke a lot
Anonymous manager at a foreign media company in 2006

Wired
“Why the Japanese hate the iPhone”
26 February 2009

Misquoted Experts
(who happen to read English AND Wired)
• “I read on and found I was quoted for
something I haven't told the author at all.”
• “I have never said \"And carrying around an
iPhone in Japan could make you look pretty
lame.\" I think most Japanese think iPhone is
the coolest item. At least I have and love
iPhone.”

“Japanese \"hate\" for iPhone
all a big mistake”
28 February 2009

General assumption #3
copycats
Asia is just

When was it invented?

Europe
Gutemberg | ~1450
Korea
Metal | ~1230
China
Wooden | ~1040

Who came first?

Where do you get inspiration from?

1.
Introduction

3G penetration in Japan and
South Korea is >70%

Japan stopped selling 2G
in 2007

100%
80%
USA
60%
3G users
40%
Japa
Chin
20% n
a
0%
0% 20% 40% 60% 80%
% of Internet connections measured above 5Mbps
(Source: Akamai, 1H2008)

Broadband?
Broadband
Broadband
100 Mbps
from 200 Kbps

Broadband?
Walking man F22 Raptor
5 km/h 2,500 km/h

10 Mbps 100 Mbps

Korea will have
1Gbps by 2012
The Messenger probe travelled at about 25,750 km/h as it passed over Mercury

Unlimited Unlimited
30 USD 10-40 USD

KDDI’s Double Flat Fee
(introduced in May 2005)
40 USD
10 USD
1.5 MB 6.5 MB~

Flat-rate data users
X? 76%

We are simply “en route”
52Kbps 128Kbps 500Kbps
500Kbps 1Mbps 2Mbps
2Mbps 4Mbps 8Mbps
8Mbps 16Mbps 30Mbps
30Mbps 50Mbps 100Mbps
100Mbps 200Mbps 500Mbps
500Mbps 1Gbps 2Gbps
2Gbps 4Gbps 8Gbps

2.
vs.

Data revenues 2008
Subscribers 70 mln 50 mln
Data ARPU % 25% 40%
Data income $10 bln $15 bln
SMS share 50% 5%
Data/subs 140 USD 300 USD

SMS = Candles
Brighter Last longer Smell good

IP = Electricity

3.
vs.

Mobile ecosystems

Technical specs
Content selection
Content distribution
Pricing system
Payment system
User Experience

iPhone vs. i-mode
Ecosystem iPhone NTT DoCoMo
Users 10 million? 55 million
Content 20,000 apps? XXX publishers
Rev share 30% 10%
Mystery %
Data 100%

48 million
i-mode users
Applications!
(January 2001)
87.7%
3G users

4.
Mobile ecosystem

Mobile Ecosystem
TOTAL
Million USD
11.6 billion USD
12,000
Commerce >
10,000
Content 4,301
8,000
3,720
6,000 3,200
4,000 2,645 7,347
5,714
2,167
1,822
2,000 4,139
2,634
1,736
1,212
0
2002 2003 2004 2005 2006 2007
Commerce Content
Source: Japan Mobile Content Forum, 2008

Content
40 USD / user / year
Commerce
70 USD / user / year

Mobile Content
Million USD TOTAL
4.3 billion USD
Full songs >
5,000
Ring tones
4,000
1,140
849
231
3,000 585
252
240
500
862
2,000 229 760
598
465
417 192 419
571
156 204
274 771
28 1,091
204
1,000 1
1,186
1,119 1,065
972 856
568
0
2002 2003 2004 2005 2006 2007
Ring tones Full songs Mobile games Mobile books
Fortune telling Screensavers Others
Source: Japan Mobile Content Forum, 2008

Flat-rate data: 2004
What happened since?

Awesome
Irrelevant? Great ?! Good So-so ?
Million USD
2004 2007
1,186
1,140
1,200 1,091
1,000
862
800
568
600 500
419
400
229231
225
204 185
200 108
0
0

Million USD
2004 2007
1,186
1,140
1,200 1,091
1,000
862
800
568
600 500
419
400
229231
225
204 185
200 108
0
0

90% of digital music
sold in Japan is mobile

Digital music revenues in Japan
Source: Infinity Venture Partners, 2008

Million USD
2004 2007
1,186
1,140
1,200 1,091
1,000
862
800
568
600 500
419
400
229231
225
204 185
200 108
0
0

Registered users
175 mln 856 mln 20 mln 8 mln
12 mln

Registered users
MOBILE
SOME ONLY!
MOBILE
175 mln 856 mln 20 mln 8 mln
12 mln

Some ads
SNS
+
Free games
+
Homepage Virtual goods

Revenues 2008 (E)
1 BILLION DOLLAR
COMPANY YOU NEVER
HEARD OF?
350 mln 1 bln! 200 mln 60 mln
200 mln

Profit margin (E)
- X? 70% 40% 40% 63%
~500 MILLION DOLLAR
AFTER TAX = 1 MYSPACE A YEAR
BASED ON CASH FLOW?

Average Revenue From Users (E)
ARFU
?10% 87% 80% 75% 75%
BETTER THAN DRUG DEALING

Market Capitalization
(March 2009)
3-15 bln? 15 bln 1.4 bln 1.2 bln
REAL MARKET CAPS BASED ON
STOCK PRICE

5.
If I have enough time

Mobile books

Digital books: Internet vs. Mobile
Flat-fee data plans
are introduced
Source: Infinity Venture Partners, 2008

Several best-selling novels in Japan in
2007 were written on mobile phones

One full bookshelf
for mobile novels at
Kinokuniya, Japan’s
largest bookstores
chain!

The two volumes of
this book “Koi zora”
(“Loving sky”) sold…

“Koi zora” sold over 2 million copies
(10 USD / book)

Even on TV!

Mobile TV penetration in Japan and
Korea is over 40%

Business model
still to be figured out

BJ
?

BJ = Broadcasting Jockey

1.5 million Private Channels
“BJ Managers” for content monitoring

Don’t forget to turn off your webcam…

Conclusion

1.
3G + Flat-rate

2.
New usages
New business models

3.
Innovation Arbitrage
THAT’S WHAT WE DO.

About +8*

There are more ideas
outside your country
than inside
Tom Kelley
CEO, IDEO
The 10 faces of Innovation

“Innovation Arbitrage”
• About us
– +8* | Plus Eight Star is the leading cross-market and cross-cultural consultancy in Asia.
– We provide local expertise & global perspective on mobile and Internet innovation from
China, Japan and South Korea to add value to and accelerate the development of our
clients’ businesses.
• Our services
– Analysis of proven best practices and business models from Asia
– Other services: executive study trips, market entry strategy, M&A advisory, partners
identification, negotiation support.
• Founder & CEO: Benjamin Joffe
– 9 years experience with mobile & Internet in Asia
– Selected among “China’s Top 100 mobile industry influencers” in 2007
– Regular speaker at events on mobile and Internet in Asia
– Fluent in English, Japanese, French with working knowledge of Mandarin, Korean and
Spanish

Selected References
• Adidas | E-commerce strategy for China, Japan & Korea
• Bouygues Telecom | Cases studies of leading Asian Web 2.0 services
and virtual worlds
• Deutsche Telekom / T-Online | Benchmark of Korean mobile & Internet
convergence strategies
• Hemisphere | Analysis of mobile marketing best practices in Japan and
South Korea (Hemisphere is a leading digital advertising agency),
analysis of leading social platforms (SNS, virtual worlds, online games).
• Microsoft | Analysis of Japan’s key players and market catalysts for
mobile commerce market positioning in China
• DeNA | Case studies of the best practices of leading social networks in
China and South Korea (DeNA operates Mobile Game Town, Japan’s
leading mobile SNS service)
• China Mobile | Benchmark of Korean leading online communities
• Sands Capital Management | Evaluation of China’s investment
opportunities in social networks in China

Social Contribution
• Mobile Monday
– Founder of the Mobile Monday forum in Beijing since 2006 (3,000+
members, 23 events, over 80 presentations).
• Media
– Monthly column on Asian innovation for Asian Business Leaders (one of
the leading Chinese business magazines), numerous interviews in
international media.
• Events
– Regular keynote speaker and moderator at Internet, Telecom, Media and
Investment events
e.g. ITU Asia, Asia Venture Capital Forum, China Mobility International Summit,
O’Reilly’s Graphing Social Patterns, Red Herring Asia, Media 08 Conference,
Wireless Developer Forum, Open Web Asia, XMediaLab, Mobile Monday Global
Summit, etc.)

Contact Us
www.plus8star.com
benjamin@plus8star.com
+81 | Japan
benjamin0123 +82 | Korea
+86 | China
http://twitter.com/plus8star
Telecom & Internet
www.linkedin.com/in/benjaminjoffe
+ Added Value
www.slideshare.net/plus8star * High quality