Online & Internet Companies - Japan


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Online & Internet Companies - Japan

  1. 1. 5 Key Players in Japanese eCommerce & Online Media Takeaways from Latest Investor Presentations
  2. 2. 5 Key Players in Japanese eCommerce & Online Media Show Rapid Shift to Mobile Internet <ul><ul><li>Takeaways on 5 companies from Recent IR Presentations </li></ul></ul><ul><ul><ul><li>Cyberagent -  - Aims to be #1 Social Application Provider  </li></ul></ul></ul><ul><ul><ul><li>Rakuten -  - Pursuing Foreign Acquisitions </li></ul></ul></ul><ul><ul><ul><li>Gree  -  - Increasing Games from 3rd-party Developers </li></ul></ul></ul><ul><ul><ul><li>DeNa -  - Aims to Compete Globally in Mobile Games </li></ul></ul></ul><ul><ul><ul><li>Yahoo Japan -  - Joint Ventures in Japan, Capitalize on Portal </li></ul></ul></ul><ul><ul><li>Keywords  </li></ul></ul><ul><ul><ul><li>ecommerce, finance, mobile games, user content, social apps, global, japan, m&A, developments, platform for 3rd-parties, online ads, smartphones, finance </li></ul></ul></ul><ul><ul><li>Relationships </li></ul></ul><ul><ul><ul><li>Yahoo J has a JV with DeNa in Online Gaming (Yahoo Mobage) </li></ul></ul></ul><ul><ul><ul><li>A Cyberagent subsidiary supplies games to Gree's Game Platform </li></ul></ul></ul><ul><ul><ul><li>Cyberagent, Gree, DeNa all play in Social Applications space, Mobile Games </li></ul></ul></ul><ul><ul><ul><li>Rakuten and Yahoo J compete in eCommerce, with DeNA also in eCommerce </li></ul></ul></ul><ul><ul><ul><li>Rakuten and Cyberagent have significant finance businesses </li></ul></ul></ul><ul><ul><ul><li>Yahoo J's rel. to Softbank, which has portfolio of telecom, online businesses </li></ul></ul></ul><ul><ul><ul><li>Yahoo J and Cyberagent have online ad businesses, while Gree is in Mobile ads </li></ul></ul></ul><ul><li>Disclaimer: Gantry Solutions is not advocating or recommending investments in any of the above companies, nor will take responsibility for the accuracy of data supplied by companies in their public filings, submissions or statements. </li></ul>
  3. 3. Cyberagent is a Major Online Player in Japan
  4. 4. Cyberagent Growing via Online Games, Content & Ads in Both Mobile and PC Segments
  5. 5. Cyberagent Increasing Profits in the Mobile Space by Providing Games to other Platforms Increasing Focus on Mobile among SNS Players Fuels Demand for Compelling Mobile Content such as Games
  6. 6. Rakuten Increased the Number of Lower-margin Business Segments but Lost Focus
  7. 7. Non-core eCommerce Services Almost 50% of Revenues but Drag on Margins
  8. 8.   Rakuten Increasing Users,Transactions but Avg # and Value of Transactions Decreases
  9. 9. A Mobile Game SNS in Japan with Rapid Growth
  10. 10. Gree has Two Revenue Pillars: Paid Games & Ads
  11. 11. Steady Member Growth at this Mobile Game SNS
  12. 12. DeNA'S eCommerce Business is Static
  13. 13. Sales Increase by 2.5x the Past Year
  14. 14. DeNA's Users are Younger, 65%<30 yrs Old but Spend Less than Older Newcomers
  15. 15. Advertising & eCommerce are Traditional, Ongoing Strengths of Yahoo Japan
  16. 16. Yahoo Japan's Online Ads Show Diversified Customer Base but No Mobile Breakout
  17. 17. Shows Little Growth in Avg Value of eCommerce Transactions
  18. 18. Company Comparison: Key Metrics <ul><li>Market Cap </li></ul><ul><li>Cyberagent:  123B JPY  </li></ul><ul><li>DeNA:            456B JPY </li></ul><ul><li>Gree:              253B JPY </li></ul><ul><li>Rakuten:        900B JPY </li></ul><ul><li>Yahoo J:     1,800B JPY </li></ul> Employees (Hold./Tot.) Cyberagent:  768/    1,677 DeNA:           450/      873 Gree:              216/- Rakuten:        3,080/ 7,025 Yahoo J:     3,586/    4,763 Age/Avg Salary Cyberagent:    29.4    6.9M DeNA:            31.1     6.2M Gree:             29.4     7.0M Rakuten:        31.4     6.8M Yahoo J:        33        5.9M No. of Subsidiaries Cyberagent:  xxx  DeNA:            xxx Gree:              xxx Rakuten:        xxx Yahoo J:     xxx
  19. 19. New Generation of Consumer Focused IT centric Companies <ul><ul><li>These companies build a platform for one or more software applications </li></ul></ul><ul><ul><li>Fee-based revenue and ad revenue balance each other, with paid services a strong feature of platforms </li></ul></ul><ul><ul><li>eCommerce is one of the lines of business </li></ul></ul><ul><ul><li>Overseas M&A is a key part of expansion plan </li></ul></ul><ul><ul><li>Japanese online consumer market attracted to new content/services </li></ul></ul><ul><ul><li>Companies have to increasingly invest in promotion to drive member growth </li></ul></ul><ul><ul><li>Danger of sprawling into lower-margin adjacent products and services to maintain growth </li></ul></ul>Similarities Challenges
  20. 20. Trends  <ul><ul><li>FX volumes decreasing because of a cap on retail investors' leverage   </li></ul></ul><ul><ul><li>Increase of smartphones and mobile devices in Japan </li></ul></ul><ul><ul><li>An aging population in Japan will impact consumers, and their behavior </li></ul></ul>Questions <ul><ul><li>Will the social gaming companies be bought by any of the traditional gaming platform companies as seen in the US? </li></ul></ul><ul><ul><li>Will investment by the companies in R&D and Recruiting be able to keep up with the competition? </li></ul></ul><ul><ul><li>How can the companies handle change in technology trends, markets, consumer tastes? </li></ul></ul>
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