Talk with Kobayashi-3: Japan Web Industry 101

Web 2.0 | 2007/03/12 00:05 | Web 2.0 Asia
I met with Mr Masashi Kobayashi, a well-known venture capitalist and blogger in Japan. He's an extremely cool guy, speaks English fluently (who said the Japanese can't speak English?), and very passionate about his job and the web industry in general : He's also organizing the New Industry Leaders Summit where many C-level officers of web and mobile companies will participate.

Masashi gave me the "101 lesson" on the Japanese web and blog market status. It was perhaps the best description of Japanese web/mobile industry a man could give in one hour. Just to summarize Masashi's key points for those who are outside of Japan:

1. The main focus of the Japanse web service has been shifted to mobile. Obviously, this is not a new observation: we all know Japan has always had a very strong mobile internet service market. But the fact that the page view of Mobagetown (the mobile-only game/blog/SNS service) is now at twice that of Mixi yet again testifies the Japanese market's focus is now fully on the mobile web. According to my other Japanese friend, Japanese people do not regard PC as "personal" any more. PC is rather like a "household appliance" shared by the family. So what's truly personal is your Geitai (mobile phone), and this is one of the reasons why mobile internet is popular especially among the youths in Japan.  

2. New profit models are popping up.  Japanese web market is seeing more and more freemium business models, where you give free tools to as many users as possible and get profits from somewhere else. For example, it looks like Mobagetown has learned what I call "Hangame's magic cycle" (Hangame is the popular casual game site in Korea and Japan). An insider of Hangame told me that games, unlike people's common belief, are NOT the essence of the gaming sites: the point system is. Games are mainly for initially getting users to the site. Once users start playing the free games, they accumulate points, which can then be used for other on-site activities such as buying stuff or game items. Going through this "points economy", users slowly get locked in on the site, and then you can apply other business models such as e-commerce or advertisement rather easily. More freemium web and mobile services are expected to come up, trying to leverage Japan's huge advertisement spendings.

3. Blogs are being tied up with vertical industries to create new values and profit models. In Japan, blogs are now being integrated into vertical industry sites to add new values. Blogs have been traditionally used by individuals as a personal CMS but now more and more companies are integrating blogs into their sites. Golf Digest Online and are good examples where blogs are used as an open communication channel and at the same time integrated with commerce features such as golf course booking and travel reservations. Affiliated marketing through blogs is also quite popular: 30% of Rakuten (Japan's #1 ecommerce service) sales reportedly take place through blogs.

4. UGC (User-generated Content) is booming, but Japanese Media industry is extremely slow to the change.  Like in other places, UGC is very popular in Japan. The Japanese take up a sizeable portion of the users of YouTube, VOX, and other UGC services. There are local players too. allows users to upload user-created commercials and get awarded by companies. Agile Media Network, aiming for the Federated Media of Japan, launched this month. But amid all these changes, traditional media companies are moving so slowly (which is not too different in other places of the world). As many people have said, the single industry that's to be affected the most by Web 2.0 is actually the media industry. Experts say that eventually all paper-based media companies will be doomed. Japan has huge media industry: It will be so interesting to see how the media giants of Japan will cope up with this huge change.
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