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Monday, 10 December 2012

Japanese and Indian mobile market comparison

VentureBeat recently carried a article about Enish, a Japanese mobile gaming start up which has gone the IPO route to feature on the Tokyo Stock Exchange. The article notes that in the US, it would be very unusual for an essentially app-centric company to create a viable business model that merits a stock exchange listing. However, Masanari Arai, one of the investors in the IPO who was interviewed for the article, points out that mobile-centric IPOs have been around in Japan since the heyday of dotcom. And his discussion on the Japanese mobile market reveals two interesting similarities with India:

1. Like Indians today, most Japanese tasted internet access for the first time through their mobile phones

Arai remarks, "In Japan — and China is the same way — the Internet didn’t start from the PC. It started from the mobile phone. In 1999, email — people were not doing email. Normal people, housewives and teenagers, they didn’t do email. … Dokomo set it up where you had to pay 300 yen a month for email. It was common sense." 

This is of course, in contrast to US and other Western markets, which got acclimatised to free content access through PCs and were therefore unwilling to pay for basic services like email. 

2. Mobile centric micro payments to carriers formed the backbone of mobile service development

Dokomo pioneered the system of consumer micro payments to carriers for services - small, recurring monthly subscriptions that users can pay easily without hesitation. $1 or 2 a month is the sweet spot. And this system came into place in 1999, when feature phones were still predominant. It was this development that made consumers ready to pay for content on mobile. Arai points out that $1-2 per customer, on a base of 20 or 30 million users, can form a viable business, and generate a $15 million monthly revenue stream. This makes mobile business start ups viable and actually encourages innovation and creation of fresh, disruptive content.

The business model is very similar to the strategy adopted by telcos in India to battle losses incurred from poor ARPUs. The Indian MVAS market is valued at $5 billion according to a report published by management consulting firm Zinnov. In India too, we see a number of successful start ups who have monetised entirely mobile centric businesses, many of which are driven by basic technologies like SMS and IVR and still targeted primarily at feature phone users.

With India's vast mobile subscriber base poised to cross 1 billion, one wonders if it would follow the Japanese trend. The key here is going to be development of premium vernacular-friendly and rich media content, which has driven growth in China and Japan. A vast portion of the Indian public, despite being English conversant, has great comfort with vernacular content. This is a huge business opportunity not only for the feature phone segment but even the fast growing smartphone category

Source : VentureBeat