Change is in the air in Japan’s social networking market. The sector has been dominated by Mixi since the dawn of social networking, but there are now signs that international brands are gaining ground. But what does social networking mean to the Japanese, and what do the international players need to acknowledge to ensure they do not squander the opportunity?
1 Now a public company, Mixi remains the leading force, with over 16 million registered users. Japan’s first social networking site, it was designed to overcome the language barrier that existed on the international sites popular in English-speaking markets, and its colourful interface has made it particularly popular among women. Other domestic sites include Gree, 2Channel (a forum - thought to be the world’s largest - encouraging anonymous work-related discussion), and MobageTown (a gaming-based network with 12 million users).
2 In comparison, Western players remain small. MySpace, which markets itself as a music-oriented site, has won a following of 1.2 million since 2006, while Facebook has attracted around half a million since its launch last year. However, the momentum is now with these sites. In February, Facebook added 100,000 registered users, compared with 40,000 for Mixi. MySpace has even launched a related print publication, along with a café chain.
“Mixi is on the verge of becoming a mature brand and we are beginning to see its stagnation. As shown by Facebook, getting into the Japanese market is very possible,” observes Jonny Shaw, partner at Naked Tokyo.
3 Japan offers big moneymaking potential to sites that operate the right model. MobageTown, valued at US$1.5 billion, offers a combination of free and paid-for games and avatars, with virtual currency awarded for clicking on advertising. Mixi made $19 million in net profit for its latest financial year. Even Twitter - profitless everywhere else in the world - used Japan as a test-bed for a commercial service.
Mixi generates revenue through banner advertising, premium memberships and linked sister sites that also use an advertising model. Alejandro Lopez, president of Suitmen, says there has been a backlash against commercialism on sites, making it harder for social networks to make money just from selling eyeballs to advertisers. But according to Kanako Miki, planner at the Digital Solutions Group of Universal McCann Japan, advertisers have more options on Japanese social networks than in the West. Japanese sites tend to offer a deeper experience with more types of content within the network. That raises opportunities for premium content and affilate marketing.
4 The other big difference between the West and Japan is mobile. Mobile users generate around 60 per cent of Mixi’s page views, and MySpace is now moving aggressively into this area via the provider SoftBank. Shaw adds that as a gaming network, MobageTown has revolutionised the Japanese public’s interaction with mobile.
5 The upshot is that Western brands will need to adapt their offering if they are to make serious inroads into Mixi’s lead. Facebook has made an attempt to localise by enlisting native Japanese-speaking users to assist in translating. Shaw adds that it offers more light-hearted interaction with friends and acquaintances than Mixi, and is easier to join (Mixi’s sign-up requires a Japanese mobile number).
However, Jon Yongfook Cockle, chief executive of Tokyo-based digital business incubator Egg Co, notes that the majority of Japanese Facebook users are those with a “globalised” outlook, saying that the interface is at odds with a common desire for anonymity. “It’s not enough simply to translate a site into Japanese and say, ‘This is ready for the Japanese market’,” he explains. “It’s a combination of the design, the functionality and the other users in the system that will attract regular Japanese users.”
That viewpoint is echoed by Lopez. “Japan is not really a country where you talk about yourself directly. It’s much more subtle. I was involved in the AOL launch a few years ago. It was a huge failure because it just tried to use the Western model.”
What it means for…
Social networks
- Mixi shows that social networks can make money in Japan. While users may not always like commercial elements, domestic sites have found ways to generate revenue.
- The recent growth of Facebook and MySpace suggests greater interest in personalised, as opposed to anonymous, networking.
- While users are open to something new, cultural sensitivity is essential. A Western site simply translated into Japanese will be rejected.
Advertisers
- The Japanese social networking model involves a far deeper experience than Western sites such as Facebook. That give advertisers more options to target or engage users. It is not yet clear whether Western sites operating in Japan will be able to offer as many options.
- Social networking is a mobile phenomenon in Japan. The majority of users are browsing on their phones rather than computers, opening the door to location-based marketing.
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