1
Games and Entertainment ContentGames and Entertainment Contentin iin i--mode Value Chain Strategymode Value Chain Strategy
From Telecom Way of Thinking From Telecom Way of Thinking
to Internet Way of Thinkingto Internet Way of Thinking
March 4th, 2003March 4th, 2003
Takeshi NatsunoTakeshi Natsuno NTT DoCoMo, Inc.NTT DoCoMo, Inc.
Games and Entertainment ContentGames and Entertainment Contentin iin i--mode Value Chain Strategymode Value Chain Strategy
From Telecom Way of Thinking From Telecom Way of Thinking
to Internet Way of Thinkingto Internet Way of Thinking
March 4th, 2003March 4th, 2003
Takeshi NatsunoTakeshi Natsuno NTT DoCoMo, Inc.NTT DoCoMo, Inc.
2
- 2 -C020116EN79-1/YU481*As of December 2001Source:3G Mobile Newsletter
Success of Japan is bringing new Concept Into Wireless Industry
Notes;All the numbers in Europe and US are based on Handset Distribution rather than active user number. Only DoCoMoand KDDI disclosed contract based active user number.
1,0139641,001
759
322
50245 200 130 130 130 75 93 93 75
330165 160 109 100 75
19557
360225
3,216
0
500
1,000
1,500
2,000
2,500
3,000
3,500
DoCoM
o
Jphone
KDDI
SK
KTF
LG
KG
Sprin
t
Nexte
l
Veriz
on
AT&
T
KPN
Vodafo
ne
O2
Orange
Vodafo
ne
T-M
obil
Mann
E-p
lus
Orange
SFR
Bouygues
Tele
fonic
a
AirTel
TIM
Om
nite
l
- 3 -C020116EN79-1/YU481
4:40
P504iS F504iSN504iS
Real phones sold in Japan nowPowerful Features of the latest 2G phones-JAVA File size; JAR30K + Scratchpad 100K w/HTTP and HTTPS connectivity
-Waiting Mode on screen for JAVA applications (Screen Saver like function)
-iHTML, GIF, JPEG, MIDI (all de-facto standards)
-end to end SSL
-TFT/TFD thousands colored LCD (65k colors)
-28.8Kbps
-Camera (100K to 310K pixel) Embedded
-IrMC (Infrared) embedded (w/ JAVA API)
-300 hours to 400 hours Standby and around 100g
From NEC, Sony Ericsson, Panasonic, Mitsubishi, Fujitsu initially.
3
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JAVA World on i-mode
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NonNon--telecom way of thinkingtelecom way of thinkingKey Words;
Positive Feedback
De-facto Standard
Content Centric Business Model
Consumer Oriented Marketing
Digital Content Market
Value Chain
Eco System
Seamless and Continuous Evolution
4
More than 2,300 Companies offering
Over 3,400 sites
i-mode subscribers
36.9 millionACTIVE USER
Corporate UseIntranet and VPN Packages
already available
More than 61,000 voluntary internet web sites
registered in a search engine.
Positive Feedback created by Content (as of March, 2003)
Proper Business ModelDe facto Standard Technology
Proper Business ModelProper Business ModelDe facto Standard TechnologyDe facto Standard Technology
Positive FeedbackPositive FeedbackPositive Feedback
De facto Standard TechnologyDe facto Standard TechnologyDe facto Standard Technology
Positive FeedbackPositive FeedbackPositive Feedback
De facto Standard TechnologyDe facto Standard TechnologyDe facto Standard Technology
Positive FeedbackPositive FeedbackPositive Feedback
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3 Key i-mode Strategies to arouse positive feedback
TechnologyTechnologyTechnology
Service Design & Business Model
Service Design & Service Design & Business ModelBusiness Model
MarketingMarketingMarketing
5
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3 Key Strategies to arouse positive feedback
Best selection of technology most attractive for content providers, not for telecom operator nor for wireless vendors.
(i.e. HTML, HTTP, GIF, MIDI, JAVA, etc.)
Understandable marketing for “ordinary” subscribers, not for “nerds” or “techy guys”. Content centric Marketing, not technology.
Best set up of business model and service design (including
handset specification) attractive for content providers, not for telecom operators nor for wireless vendors.
(i.e. Small Payment System, User Friendly Portal, etc.)
3 Key i-mode Strategies to arouse positive feedback
- 9 -wallstreet¥Japanese¥Equity Story¥draft 08242001.ppt
Aggregate ARPU -Boosted by i-mode ARPU
== ARPU generated purely from iARPU generated purely from i--mode x (No. of imode x (No. of i--mode subs / Total cellular subs)mode subs / Total cellular subs)
1) Includes the ¥310 increase resulting from the access charge income from mobile to mobile communication
Higher Higher ii--mode mode ARPUARPU
Introduction of Introduction of Java HandsetsJava Handsets
Contents Contents ExpansionExpansion
Introduction of Introduction of Handsets with Handsets with Color DisplaysColor Displays
8,6207,770
6,2906,4906,940
120880
1,670 1,6901,540
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1997/3 1998/3 1999/3 2000/3 2001/3 2002/9 2003/3(E)2002/3
Aggr
egat
e AR
PU (?
)
i-mode ARPUVoice ARPU
19.1% 78.0%19.1% 78.0% 80%80%upup
8,740 8,650 8,4809,270
10,800
12,570
7,9808,160
II--mode ratiomode ratio
6
Positive Feedback with Java (as of March, 2003)
JAVA Subscribers16.3 millionACTIVE USER
JAVA BasedCorporate Application
6,000 IndependentJava Sites on the Internet
JAVA Application600 sites
Why DoCoMo Java (DoJa) is so successful?
Technology ; 30KB Application and 100KB Scratch pad (easy download and http(s) connection to servers expected) Best API sets for Games and Graphics
Marketing ; Application oriented mass-marketing (The word “JAVA” is not important for ordinary users, application is.)
Business Model ; Monthly Subscription (better perception for users, sustainable business for game providers) One time download business model may cause morale hazard (e.g. Korean market)
7
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2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
Average of all 251Series
handsets
Average of Average of all 251all 251SeriesSeries
handsetshandsets
21,695(7.4%)
24,989(16.0%)
27,769(25.8%)
30,182(34.8%)
32,156(39.2%)
33,493(42.5%)
(Packets)
1/01 2/01 3/01 4/01 5/01 6/01 7/01 8/01 9/01 10/01 11/01 12/01 1/02 2/02 3/02 4/02 5/02 6/02 7/02 8/02 9/02 10/02 11/02
Average of all 504 series
handsets
Average of Average of all 504 series all 504 series
handsetshandsets2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
(Packets)
34,883(43.1%)Average of non-i-appli handsets
Average of all i-mode handsetsAverage of i-appli-compatible handsets
Packet usage of PDC i-mode handsets (packets/day/sub) No. of i-mode subscribers (1,000 subs) Numbers in the parenthesis below are % of i-appli-compatible handsets (PDC)
No. of i-appli-compatible handsets (PDC)
503i Series Released
1/2001
503503i Series i Series Released Released
1/20011/2001
4/02 5/02 6/02 7/02 8/02 9/02 10/02 11/02
210 213
226 225Details 226 225 223 227
504iS Series 251iS Series
Released
504504iS Series iS Series 251iS Series251iS Series
ReleasedReleased251i Series
Released
251251i Seriesi Series
ReleasedReleased
504i SeriesReleased
504504i Seriesi SeriesReleasedReleased
(Reference)251iS
((ReferenceReference))251iS251iS
(Reference)504iS
((ReferenceReference))504iS504iS
35,568(42.3%)
Packet Usage Boosted by JAVA Handsets
Average Packet Usage of JAVA phone users
Average Packet Usage of NON-JAVA phone users
Average Packet Usage of Enhanced JAVA phone users
- 13 -momentum¥EquityStory¥18 Jan, 2000¥Japanese_Large.ppt
314767
1,596
3,1073,707
4,7505,731
6,9547,769
8,5539,150
9,665
34.2
42.1
47.9 48.746.8 46.4
48.250.2 51.0 51.7
52.7 53.0
2.34
1.942.09 2.16
2.27 2.322.40 2.43 2.46 2.44 2.47 2.49
0
10
20
30
40
50
60
Sep-99 Dec-99 Mar-00 Jun-00 Sep-00 Dec-00 Mar-01 Jun-01 Sep-01 Dec-01 Mar-02 Jun-02 Sep-02
0
2,000
4,000
6,000
8,000
10,000
12,000
iモード・スタティスティクス(4)
(million Yen)
10 million subs
10 10 million million subssubs
JAVA LaunchJAVA LaunchJAVA Launch
504 Launch504504 LaunchLaunch
The Size of Digital Content Market on i-mode Excluding e-commerce and other payment method provided by third parties.
More than $1 billion digital
content market in 2002!
8
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Market Size of GAMES in i-mode (1)Content Subscription
0
10
20
30
40
50
A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
1999 2000 2001 2002
0
2
4
6
8
10
Total Content Subscription Game Category
Millio
n
Millio
nContent Subscription
0
10
20
30
40
50
A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
1999 2000 2001 2002
0
2
4
6
8
10
Total Content Subscription Game Category
Millio
n
Millio
n
7.4% of total content subscription is game category.
3.7 million Subscribers.
- 15 -C020116EN79-1/YU481
# of Sites
0
500
1000
1500
2000
2500
3000
3500
4000
J F M A M J J A S O N D
2002
0
50
100
150
200
250
300
350
400
Sites Sites in Game Category Java Sites in Game Category
8.3 % of i-mode official sites is in Game category.
50% of Game Sites provide JAVA games.
Market Size of GAMES in i-mode (2)
9
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Market Size of GAMES in i-mode (3)
# of Downloads of JAVA Program
0
1
2
3
4
5
6
7
8
M J J A S O N D
JAVA Downloads JAVA Downloads in Game Category
Millio
n
3 million Java Game Downloads per month out of 7 million total Java downloads. (47%)
- 17 -C020116EN79-1/YU481
Market Size of GAMES in i-mode (4)
Content Charges
0
2
4
6
8
10
12
A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
1999 2000 2001 2002
0
400
800
1200
1600
2000
2400
Total Content Revenue Game Category Sites
Millio
n Y
en
Billio
n Y
en
11.4 % of content revenue goes to Game category.
Around $100 million in 2002.
10
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Content offering
ContentPartners
Handsets
Competition
Competition
Presentation capability
De facto standardtechnology
Sales channel& media
Content
i-modePortal
Operator’sMarketing
Platform
Advertise & PRProduct offering
Add attraction
Guide users
Product offering
Marketing opportunity
Inter-operability
Co-marketing
Portalfunctionality
Technological capability
Eco-system of i-modeNo one can rule the world.