Social networks have become nearly universal in the US and marketers have taken notice. More marketers are spending on social networks, and according tocomScore, social media display ads account for an increasing share of impressions, but the channel remains one of cheapest forms of online marketing today.
In Japan, by contrast, social networks have been slow to take off. But some have found a niche that can turn nickel-and-dime online and mobile revenues into dollars—or yen—a mix of free and paid mobile social games and microtransactions.
Traditional social networking websites have been slow or unable to catch on in Japan, but mobile social networking rates are comparable to those in the US. According to an October 2010 survey conducted by the UK’s Office of Communications (Ofcom), mobile social network penetration in both Japan and the US was at 22% of mobile phone users.
In Japan internet user's access their social network's by smartphone instead of a desktop computer or laptop:
Japan’s Ministry of Internal Affairs and Communications published an interestingreport [PDF] about the country’s market for mobile content and services this week. According to the ministry, that market grew by 12% to hit 1.52 trillion yen ($17.3 billion) last year, including mobile advertising.
The $17.3 billion breaks down into mobile commerce, which was worth $11 billion and mobile content (games, ring tones, e-books etc.), which amounted to a $6.3 billion market (see graphic below – click to enlarge).
According to company reports from Japan’s three largest home-grown social networks, GREE, mixi and DeNA’s Mobage-town, in September 2010 each had between 21 million and 23 million users. All three have a strong mobile offering. GREE and Mobage-town heavily incorporate mobile social games, and both GREE and mixi see vastly more page views via mobile: In September 2010 GREE had 46.52 billion mobile and 500 million PC page views while mixi had 26.12 billion mobile and 4.62 billion PC page views. Mobage-town did not report a breakout of how users view the site, but page views may not tell the whole story of usage due to small screen size and the navigation structure of mobile sites.
GREE and Mobage-town have increased user numbers and engagement by offering hundreds of free and paid games, encouraging playing with and competing against friends, enabling microtransactions for in-game upgrades and maintaining leaderboard rankings.
As a result, profits are soaring. From July to September 2010 DeNA and GREE reported net sales of ¥27.1 billion and ¥12.4 billion, representing increases of 216% and 82% year over year, respectively. For DeNA, social games, including item billing, in-game ads, affiliate ads and avatars, represented 79.0% of total sales, while traditional display and contextual ads accounted for 6.3%. The rest consists of ecommerce and other revenues. The ratio was similar for GREE, with paid services accounting for 80.6% of total sales and the other 19.4% coming from ads. mixi, however, remains heavily dependent on advertising, and total sales are much lower than their home rivals—¥3.9 billion, for an increase of 22% over the year before. In an attempt to catch up, mixi opened its platform and has attracted outside developers including GREE, Facebook and Zynga to increase engagement and develop paid services like games.
Mobile internet and gaming are more widespread in Japan than the US but DeNA thinks that they have a solid chance of duplicating success across the Pacific, snapping up US-based mobile game developers Gameview Studios, Astro Ape Studios and ngmoco. In a December 2010 press conference, DeNA and ngmoco unveiled a new gaming platform, ngCore, which they expect to launch globally in April 2011 on the Android OS.
As DeNA takes Mobage global, what can US marketers expect? Not all trends that come out of Japan translate to the US, but gaming seems to be one exception. You only have to look at Nintendo and Sony for two of the biggest examples. And a sizeable percentage of internet users in the US are already playing casual online, social network and mobile games, according to a survey by Newzoo BV.
Inside Social Games estimated that tens of millions of social network users worldwide played games on Facebook and MySpace in December 2010. As mobile games add social elements and connectivity allows for individual ad delivery, marketers’ will want to pay attention to this growing audience. Brands will be able to engage captivated gamers on the go in a variety of ways, including through the use of in-game ads and promotions, specialty service packs and sponsorships.
COMMENTARY: There are very few regions where Facebook has not been able to penetrate the market as it has in the West. China, Russia and South Korea have all developed their own popular variants of the idea. Japan also has its own social networking sites and the top three: Gree, Mixi and Mobage Town, are currently in a battle that has become so fierce that Facebook might not even stand a chance.
So why has Facebook been such a failure in Japan? There are three key reasons why Facebook has failed to catch on in Japan:
- Complacency and failure to adopt to cultural differences - Societal and cultural gaps are particularly evident in the case of Japan. Market entry in this country with a “What works in the US must also work over there”-attitude is going awry for both Facebook and MySpace. It’s not a stereotype that communication tends to be nonverbal in Japan. The society generally puts more emphasis on the community rather than on the individual. Also, security plays a major role in many aspects of Japanese life. A perfect example of a cultural misconception: Mark Zuckerberg recently said in Tokyo one of Facebook’s unique selling points is the usage of real names and photos in profiles. This may be true but it’s exactly what Japanese web users usually try to avoid. And they already have a high-trust, invitation-based social network anyway: Mixi.
- Lost in Translation - MySpace opened a Tokyo office in 2006, three years after launch in the US. It took Facebook four years to initiate a user-generated translation of their site. Too late – in the meantime Mixi developed into a $1 billion-listed company without the slightest competition from abroad. The quality of the site’s translation is amateurish in parts (at least in the initial version), a challenge MySpace’s local team was at least able to master. In addition, due to relatively weak English skills, most of the Facebook applications are pointless in the eyes of Japanese users. Without apps that make sense, Facebook is crippled. Facebook is also missing the function Japanese consumers deem fundamental in a social network: blogging. This paradox may be the site’s biggest drawback in blog-crazy Japan.
- Sites Not Optimized Japanese Mobile Phones - Perhaps an even bigger problem is that both Facebook and MySpace fail to offer an optimized version for Japanese handsets. Millions of Japanese are accustomed to using one thumb, a dialpad and a jog dial on their phones when accessing the web during their commutes to school and work. In this country, the mobile web is bigger than the PC web.
Success factors in Japan: Get in fast, show some respect, and find a local partner
Offering a country-specific version before a local copycat beats you to it is an obvious key factor for success, and not only in Japan. But being relatively complex entities, social networks face a trade-off between additional risks and potential gains in the course of localization. Overdoing the adoption to local tastes might compromise the big idea and infrastructure of the site (i.e. in the form of cluttered interfaces or fragmentation into culturally and linguistically walled “mini-networks”).
Practical experience from the Japanese web industry has shown that partnering up with a local company is the best way to diminish these dangers (see Yahoo Japan, the No. 1 site in the country, which is a joint venture run by Softbank). Japan has embraced just five American web brands which decided to go solo and none of them is a social network: Wikipedia, Google, YouTube, Twitter and Amazon.
MySpace’s establishing of a physical presence in Japan was received as a sign of long-term commitment, a move which melds with the local mentality. But in Japan, maintaining your autonomy comes with a price: It’s no secret that it usually takes foreign companies years to build up brand identity, trust, industry connections and general market knowledge.
The same is true for complex web products such as a social network – if the company behind it really means it. Currently it seems Facebook and (to a lesser degree) MySpace chose to start working the Japanese market with a minimum of resources. But in most cases, remote management is perceived in insular Japan as second-rate treatment. Apart from M&As, cooperating with an established local partner seems to be the best shortcut option conceivable. It’s almost impossible to win in Japan without close interaction with end users, press, developers, potential employees and advertisers.
But the Japanese market isn’t lost yet for MySpace and Facebook, despite Mixi’s dominance. If millions of Americans don’t mind registering to multiple social networks, why should the Japanese? Growth potential, especially for Facebook, also exists in the realm of connecting professionals online, which may be the reason why LinkedIn is currently pondering a market entry in Japan. In that specific field, they and designated partner Digital Garage (whichhelped Twitter build traction and earn money in Japan), see practically no competition in this country.
If Facebook cannot get there act together in Japan after four years there, it is not going to get any easier. The Japanese have a favorite social networking site, and they are fiercely loyal to that site. They have already invested a lot of time and effort or "social equity" into building their online network, so it will be next to impossible to draw them away and join Facebook.
Sorry Zuck, but you Zuck in Japan.
Courtesy of an article dated December 29, 2010 appearing in eMarketer, an article dated August 3, 2008 appearing in TechCrunch and an article dated September 15, 2010 appearing in The Japan Times Online
You're right. The survey shows that mostly all people nationwide are now using social media sites.Actually, the bracket of users are getting wider this time. such a huge success..
Posted by: used laptops | 02/18/2011 at 07:48 AM