I'm glad to see at least a few Keitai-L folks read WW. ;-)
Perhaps some additional thoughts on my thinking behind WW No. 22 may help to
put the matter into perspective.
First, it is quite difficult to get anyone -- foreign or Japanese -- to
state (even off the record) whether their mobile Web effort is profitable.
Go ahead and try -- I've just spent the past 14 months running around Tokyo
like a madman asking this question, and have gotten little response. If you
can do better, the beer's on me!
At least in part, I understand why people are reluctant to state a figure:
measuring "profit" depends directly on what costs are included. Few serious
mobile Web sites exist in isolation, and it's often difficult to state what
portion of backend SI costs should be borne by the mobile component or
channel.
Mobile sites are often created to be part of existing wired Web sites, they
are integrated with existing call center or IVR systems (especially in the
case of online brokers or catalog shopping), and they are tightly integrated
with existing mail marketing and other electronic promotion efforts. So no
one wants to state a figure unless the entire story of how their backend was
built is told (to give proper context and background), and no one wants to
tell that because it gives away too much info to the public domain.
Even so, when I ask "OK--if you can't state a profit figure, can you tell me
if you are satisfied with the value that your wireless Web site brings? What
about revenues?" I get all mixed reactions. People fidget nervously, or
glance about the room, or stare fixedly at the huge green alien Mars monster
that is hovering above my head (at least I guess that's what they're staring
at, because they certainly don't look me in the eye). And that's why I wrote
that: "there's an awful lot of piping down going on."
Whenever people make money, they tell the world -- I get faxed press
releases, phone calls, emails, invitations to grand announcements. People
practically beg to get the word out that they've been successful at some
line of business, and have the profit figures to prove it.
How come no one ever calls, mails, or faxes to announce that their i-mode
site just earned them XXX,000 yen in profits for the past quarter?
So there's my point: Other than a small number of major brand owners, like
Cybird, Bandai, Tsutaya, Disney, some of the gaming houses, and some of the
ring tone download sites, I believe that few sites make a cash profit.
I would argue that outside of the top ten content sites, and outside of some
mobile Net service providers, like DoubleClick (for ads), there's no profit
being generated at all -- and the operators end up benefiting hugely from
the existence of thousands of mobile sites (which helps attract millions of
subscribers to the operators' services), in which companies large and small
invest time, effort, and $$ at no cost to DoCoMo, KDDI, or J-Phone.
And it's a mistake to think that Japan's wireless webs have created some
special way to earn ecom $$ not seen on the Internet at large. It would be
irresponsible for J@pan Inc to lead anyone to think otherwise, and that's
why we devoted an issue of WW to this view. I am continually asked to
provide examples of companies making real money on wireless, and I can't --
outside of the aforementioned top brand name owners. *** Can anyone on the
list do better???***
Sure, it's a business, and a damn interesting one -- replete with potential.
And yes, there is some $$ being made. But I don't see how anyone can get all
gushy and breathless about wireless in Japan if they take a sober look at
who's making the money.
Further, the operators not only profit from all the free content and
services but additionally twist arms to obtain even more concessions from
non-profit-making content/service owners. One site was told by a large
wireless company here -- point blank -- that they had to provide a certain
type of functionality on their English menu or would NOT be allowed to list
as an official site on the English OR Japanese menus. That additional
functionality cost the content owner several $000s to provide, but is, as
yet (almost a year later) generating little additional revenue, much less
any profit.
Also, my comment about "and at least half of the official i-mode sites are
not profitable" comes directly from Natsuno-san, who told me, and I quote:
There are some content providers who cannot earn money. Out of 1,600
[sites],
around 500 are for-fee; the others are free because they can earn
money in a
different way. For example, Tsutaya Online is selling DVDs and
earning more
than ¥100 million per month. [As I mentioned], some of the
securities brokerages
are earning ¥800 million per month -- it's very profitable. So those
1,100 free content
sites have already found some way to [stay in] this business. Of the
remaining
500 [for-fee] content sites, only 50 percent have more than 10,000
subscribers.
10,000 subscribers is a kind of magic point, because $30,000 is
pretty big money
for a small company with [limited] human resources.
(See
http://www.japaninc.com/mag/comp/2001/06/print/jun01p_natsuno.html).
Sure, as I said, some sites make money. And some sites get benefit from
their wireless efforts due to marketing, promotion, or co-channel synergies.
But don't for a moment think that Japan's wireless Webs have achieved
something that the Web at large hasn't (i.e. a foolproof profit model).
--Daniel Scuka
PS. JI's own experience with setting up an i-mode site has little to do with
the comments above and in WW. For us, it was a learning experience and was
valuable in that it allowed us to understand what it takes to build a site,
and what would be required to maintain it. On both these counts, we felt we
had insufficient resources at hand to do a proper job, so we more or less
let the site ride as is. Even so, our Hangman game picked up 44,936 PVs in
the June-Aug quarter. Maybe that's why this topic has generated so much
interest--we all know wireless is a heck of a great way to reach people!
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Received on Fri Sep 7 08:42:11 2001