TOKYO-Since NTT DoCoMo launched its iMode wireless data service in February 1999, the number of mobile Internet users in Japan-more than 10 million as of the end of May-has taken off. As more users acquire browser phones, more content providers have entered the new market and started providing a variety of content.
Among the country’s three mobile Internet services, the iMode service controls 70 percent of the market. iMode is strong because it has a larger variety of content than the other services. As of the end of May, iMode had about 500 official sites and more than 10,000 unofficial sites. Because of the diverse applications, more users are migrating to iMode, which attracts more content providers.
Due to the profitable business model, some content providers for mobile phones plan to go public soon. Photo Net Japan, a firm offering photo files for iMode users, is planning to list on the U.S. NASDAQ stock exchange. Net Village, a business providing remote e-mail services, also is going to be listed on NASDAQ.
Having a large customer base for advertising through its iMode platform, NTT DoCoMo in June started letting content providers run ads on their official sites.
iMode for fun
Most iMode subscribers use their tiny screens for enjoying entertainment programs. According to a recent survey by Weekly Diamond, entertainment content occupied 60 percent of the total iMode use.
Among the several games for iMode, a fishing game provided by Dwango Co. is winning popularity. Players of the game, called Tsuribaka Kibun (Fishing Mania), select a fishing spot, bait and a fishing rod and hit the go button. When a fish bites, the player receives an e-mail. If players successfully catch many fish, they are listed on the game’s top 10 fish masters list and are occasionally given sushi coupons. The game, started in November 1999, has 220,000 users.
Nobuo Kawakami, president and chief executive officer of Dwango, said because the game is so addictive, some users spend 10,000 yen (US$94) to 20,000 yen (US$188) on packet data charges per month, in addition to the 300 yen (US$2.82) per month charge to play the game.
Dwango also provides three other games, with a fourth to be offered soon.
But the most popular entertainment content is Itsudemo Charappa provided by Bandai Co. Subscribers of Itsudemo Charappa receive different versions of their favorite cartoon characters every day-30 or 31 versions a month-for 100 yen (US$0.94) a month. Most subscribers put the characters on the waiting screens of their phones. The Itsudemo Charappa service alone has 1.16 million subscribers. With another 16 iMode games and character programs, Bandai has a total of 1.57 subscribers for its iMode content.
Toshiki Hayashi, general manager of the Network Department of Bandai, said the firm is developing its iMode programs for subscribers who want to spend just five minutes using a service, while waiting for a commuter train, for example.
The firm is planing to export its mobile entertainment content overseas.
Along with characters and games, having a phone play music when a call is received is very popular in Japan. Yamaha’s Meroccha site has won 100,000 subscribers since it launched in March. Subscribers can download up to 10 favorite music pieces out of 600 choices to their phones. Because the music lasts around 30 seconds and subscribers download just the music’s digital data not the real music, the download takes just five seconds.
According to Yasushi Ito, a spokesperson for Yamaha, the firm is targeting 400,000 subscribers for the service and 800 million yen (US$7.5 million) in revenues by March 2001.
Planning to launch commercial music distribution services in third-quarter 2000, NTT DoCoMo is now carrying out experimental services for PHS networks. The carrier is planning to distribute music for cellular phones later.
Unlike the call receiving music service, subscribers of the music distribution services download an entire piece of music. Even using PHS, which has a data transmission speed of 64 kilobits per second (kbps), a four-minute music piece takes eight minutes to download.
Mariko Wada, a spokesperson for NTT DoCoMo, said the carrier might wait to begin music distribution services for cellular phones until third-generation (3G) services are launched, currently planned for May 2001.
Business applications
DoCoMo initially expected an iMode handset’s tiny screen would be used for business purposes rather than entertainment. However, business users have been slow to begin using iMode. Banks are emphasizing mobile banking services targeting iMode.
Of the 500 official sites for iMode services, up to 263 sites are banks. Among them, Sakura Bank is most aggressively promoting iMode banking. Sakura had 92,599 registered users for its Browser Bank service, used 100,000 times per month, as of the end of March.
The bank charges 100 yen for an iMode money transfer service in addition to its standard money transfer fees. Still, iMode subscribers use the money transfer service 5,000 times per month. Masanao Oki, assistant general manager of Sakura Bank, said that Sakura’s simple, easy-to-use architecture has successfully won many users. Oki said the bank would like to expand its customer base for iMode banking by improving the interface, lowering the handling fee and offering more services.
Brokerage firms are scrambling to make a new stock-dealing platform for iMode. DLJDirect SFG Securities, an Internet broker, currently receives up to 20 percent of its total online orders from iMode.
Daiwa Direct, the online business of Daiwa Securities, receives 12 percent of its total orders from iMode. To expand the number of iMode transactions, Daiwa Direct started free e-mail services. Registered subscribers can receive free e-mail from Daiwa when a certain stock price increases or decreases by a user-designated percentage.
Mamoru Takahashi, deputy general manager of Daiwa Direct, said the firm would like to increase online transactions during the day by promoting iMode transactions. At present, 60 percent of the company’s online transactions are conducted at night.
Takahashi pointed out iMode is an exceptional information device for stock prices. “Before iMode, ordinary people did not have any way to get stock info. But now, people can check stock prices anytime, anywhere with everybody’s device of iMode,” Takahashi said.
E-commerce use increases
Although transactions are small, e-commerce over iMode terminals has started to take off.
Japan Air Lines (JAL) has been providing air ticket reservation services over iMode since February 1999. According to Takayuki Koike, a JAL spokesperson, the number of users of the service has been increasing at the same rate as the total number of iMode users. iMode users making JAL airline reservations increased by 40 percent in May compared with April numbers, he said.
Honyasan, a virtual book store, started selling books over iMode late last year. According to Yukine Sakurama, a spokesperson of Honyasan, registered members for iMode shopping number 3,000, but the firm is forecasting that up to 70 percent of its total revenues will come from cellular phones in five years.
Tetsuya Sanada, executive vice president of iMode content provider Cybird, said wireless phone services succeeded in Japan because carriers managed content by selecting some official sites, allowing those content providers to charge for their content and having carriers collect the content subscription fees.
Numerous content providers charge their subscribers 100 yen to 300 yen per month, and NTT DoCoMo collects these content subscription fees for the official sites instead of the content providers, taking a 9-percent commission. Freed from the usually troublesome job of money collection, content providers can concentrate their t
ime and energy on developing services. Therefore, content providers heavily compete with each other to create more attract
ive content to be selected as official sites by NTT DoCoMo.
Another factor of NTT DoCoMo’s success lies in its language called Compact Hypertext Markup Language (C-HTML) developed by Access Co. Because C-HTML is a subset of HTML, the common language for the Internet, it is easy for content creators to convert their Web content to C-HTML. In addition, Access has made C-HTML an open technology.
Now iMode is being evolved into DoCoMo’s third-generation (3G) network. For 3G service, NTT DoCoMo is planning to use Extended HTML (XHTML), which is believed to be the standard for 3G service. If this happens, content providers can easily provide their content for more than one platform without complicated rewriting of sites.
