The art of killing time online

Japan, Inc., Feb, 2003 by Michael Thuresson

No one does wireless entertainment better than the Japanese; that's why American carriers are taking pains to copy the Japanese model, and why transpacific alliances are all the rage.

THE REMARKABLE POPULARITY OF downloadable wireless entertainment in Japan has not only changed the way Japanese people wait for trains and otherwise kill time, but its active inertia has carried overseas. Western markets have, in varying forms, begun to attempt to replicate Japan's wireless revolution. Japan's runaway success has been one of the main inspirations for the fledgling US market, which seeks a strong Japanese flavor.

Many American companies have internalized the fact that games have become the driver of wireless data riches for Japanese carriers. DoCoMo's 14 million plus i-appli Java handset users average [yen]3,500 per month in data fees, spending roughly 60 percent of this money on games, according to most industry estimates. A new study by IDC, a research firm specializing in IT, shows the number of mobile garners in the US is expected to skyrocket from 7 million in 2002 to 71.2 million in 2007, with gaming revenues expected to grow in the same period from $130 million to $4 billion. The US has learned much from Japan on how to stimulate this growth, though several problems remain.

The data revenue numbers of the Japanese carriers jump out at debt-ridden US carriers that have in recent years poured billions of dollars into network upgrades and wireless spectrum, but have yet to realize multimedia functionality and higher data transmission speeds. The short-term bets seem to be on low-bandwidth applications like downloadable ringtones and games, which take advantage of handset developments instead of increased network speed. This will ring familiar to Japanese market watchers. NTT DoCoMo, along with its rivals J-Phone and KDDI, created and perfected this approach of enticing people to use entertainment applications through attractive color handsets. "The US carriers are basically copying the Japanese successes as closely as possible," says Matthew Bellows, publisher of Boston-based Wireless Gaming Review. "Our first generation handsets, on both Sprint and Verizon Wireless, which are the two most aggressive mobile entertainment-oriented carriers, are direct adaptations of Japanese models. The clamshell design, the big color screen, even the brushed metal casing - all are derived from successful Japanese designs."

To draw attention to its ringtones and game offerings, Verizon Wireless, the largest US operator with over 30 million subscribers, spent the past fall blitzing the country with advertising for its "Get It Now" content service on feature-rich phones. Color screens, long a staple of Japan, have only emerged on a mass scale this year in the US, with Japanese manufacturers Sharp, Kyocera and Sanyo supplying a good portion of them. According to Bellows, the quality of the US phones and networks is impressive compared to the early days of i-mode. "The phones and networks are better in the US than they were in Japan in '99. DoCoMo's i-mode bandwidth goes at 9.6 kbps tops, while both Sprint and Verizon average roughly 30 kbps," he says.

The fact that the wireless Java (J2ME) i-appli games exploded in popularity while running on DoCoMo's relatively slow second-generation (2G) network is a testament to the marketing, appeal and inexpensiveness of the handsets, and the cultivation of good, cheap content. The original i-appli handsets in Japan were almost all under $100, with many under $50, and there was also much greater selection than there is in the US.

As in Japan, ringtones and games in the US are being flogged as an introduction to entertainment services. "The original iappli handsets were the first DoCoMo models to use Yamaha's 16-voice chips, and the sound quality was a strong selling point," says Steve Meyers, a team manager at Layer-8 Technologies, a music media development company (and a subsidiary of LINC Media, Japan Inc Communication's parent company). By making the new, jazzier-sounding, game-enabled phones cheap, DoCoMo was able to get the phones in the hands of over 14 million users within two years, creating a mass market for content, and awakening game developers to the possibilities. The high number of i-appli phones in circulation was the impetus for the creation of some 60,000 unofficial, free sites in the i-mode universe. The US is at the beginning of this challenge: sparking developer innovation and feeding consumer interest.

One question is, with a limited selection of pricey color handsets and erratic developer revenue sharing plans, can the US carriers inspire the kind of initial creative activity from developers that drove the interest in cool and useful content? As of September, Verizon's "Get It Now" service was offering only three color handsets -- one from Sharp and two from Motorola -- all of which sell in the wallet-popping $150-$300 range. Sprint offers a few slightly cheaper color models -- a $99 Sanyo model, a clamshell Samsung model for $149 and another Samsung model going for over $200. The good news is that many more color handsets are on the way, which should promote price reductions for the existing models.