Internet
ò Expedia, the No. 1 U.S. online travel agency, launched a Japanese version of its popular travel site, marking the first attempt at a branded site in Asia by one of the top four U.S. travel agencies. According to PhoCusWright, a travel research company, the number of online travel bookings registered a growth of 31 percent in 2005 and 28 percent in 2006 in the Asia-Pacific region. The study said bookings are forecast to rise by 25 percent in 2007 and 2008. The figures do not include corporate bookings. At present, only about 10 percent of travel is booked online in Japan, compared to the U.S. where almost 50 percent of travel is booked online. Expedia counts among its rivals in the market Priceline, Sabre Holdings, Travelocity, and Orbitz. Some of these companies have achieved a presence in the Asia Pacific region by means of mergers and acquisitions. Travelocity owns the Zuji travel site, which manages its Asia-Pacific interests. Orbitz Worldwide's business in Asia-Pacific is Flairview Travel. Priceline owns 15 percent of an Internet business that offers travel services in Singapore, Hong Kong and Taiwan. Expedia also owns the eLong travel site in China.
ò Softbank announced that it has closed one of the world's biggest whole-business securitizations on record, by way of a US$12.4 billion refinancing of the purchase of Vodafone Japan's mobile business. The company, however, said that interest payments on the ground-breaking deal would cut Softbank's pre-tax profit by 15.9 billion this fiscal year. The extra interest costs are ascribed to the two-month delay completing the deal, during which long-term interest rates have risen. The company did not disclose the rates it had agreed with the financing banks. There are signs, however, that the financing was not that smooth given SoftbankÆs admission earlier that Goldman Sachs, an investment bank with close ties to the company, had quit the syndicate of banks involved in the deal. No comments were sourced from Goldman Sachs even as some analysts believe that the deal could enhance the global interest in whole-business securitizations. Lovels, the law firm advising Softbank, stated that the model might be applicable to JapanÆs entertainment industry, including pachinko gambling parlors, love hotels and amusement parks, since they these are characterized by a steady stream of income.
ò According to figures published by the Recording Industry Association of Japan (RIAJ), legal downloads of music in Japan continued to register growth in the third quarter of the year even as growth appeared to be slowing down. The study shows that the total number of downloads was 91.9 million during the July to September quarter, which is 23 percent higher than the same period last year but only 2 percent above the second quarter of this year. Music obtained by mobile phones, which includes full tracks, ringtones and ringback tones, still dominates the Japanese market and account for the vast majority of downloads. The number of downloads from Internet sites, like iTunes and the Sony-affiliated Mora site, totaled 5.7 million during the quarter, which represents an increase on the same period last year but a decline from this year's second quarter. For the first time the RIAJ categorized the Internet download figures by type of download. Of the 5.7 million downloads in the third quarter about 5.4 million downloads were of singles. There were 260,000 downloads of albums and 86,000 downloads of other paid content, which were mainly music videos.
Mobile/Wireless
ò NTT DoCoMo, Fuji Television Network, Nippon Broadcasting System and other firms announced entering into an alliance to develop broadcast services for mobile telephones. The alliance is said to form a 30 million yen (US$260,000) joint venture to develop multimedia services. The partnership will include satellite broadcaster Sky Perfect Communications and trading house Itochu Corp. Under the agreement, the companies said they will promote a digital broadcast standard for mobile television and call on regulators to reallocate frequency bands to such services when the bandwidth now used for analogue television will be freed up by 2011. Earlier in April, free digital broadcasts for mobile telephones, called One Sag, began in Japan. The service, however, is limited to simultaneous broadcasts of regular television programs. Local regulators disclosed that they may allow distribution of content made specifically for mobile telephones from 2008.
ò Industry sources said that Nippon Telegraph and Telephone Corp. (NTT) are set to reduce charges on calls from fixed-line to mobile phones by about 10 percent in January. It is expected that the new rates will come out among the lowest in the industry; a situation that analysts say might push rivals such as KDDI Corp. and Softbank Corp. to make similar cuts. NTT East Corp., one of the company's two regional units, is reportedly aiming to slash rates on calls from fixed-line phones to NTT DoCoMo Inc. and KDDI's au brand cell phones. The lower rates are seen as bringing down revenues for NTT by a combined 4 billion yen (US$34.6 million) or so each year, in situations where call volumes remain the same.
ò Market sources said that Japanese investors have released some US$8 million into cutting-edge technology, which is being developed by GeoVector in New Zealand, which lets people point their phones to see where they are and search around for information about shops, restaurants and sights. A GeoVector official, however, said that people from New Zealand may be among the last to experience the fruits of the company's work, saying Telecom and Vodafone have lost some of their desire to be at the forefront of innovation. Its first service, a trial developed in conjunction with Japan's second-largest mobile network operator, KDDI, and Japanese mapping company Mapion, enables KDDI subscribers to search for and call up information on 700,000 shops, eateries and other points of interest. Though it has not been actively promoted, it has been downloaded by 2500 KDDI customers. GeoVector said it will soon launch its first commercial application in partnership with NEC, which will let mobile network operators bill subscribers about US$3 a month for the Mapion service and charge advertisers for displaying sponsored links and banner ads on search results.
Media, Entertainment and Gaming
ò Namco Bandai Holdings Inc., Japan's second-biggest maker of video-game software, said it must sell at least half a million copies a game based on Sony Corp.'s PlayStation 3 console to make money on its titles. The company said graphics for the high-definition games cost about 1 billion yen (US$8.6 million) to create, more than double that for Nintendo Co.'s Wii titles. Analysts also said that shortages of the PlayStation 3 may also make it more difficult for software makers to sell enough games. Sony halved shipment targets for the console this year and delayed the European release amid a scarcity for some parts, making it possible that the company may have missed its goal of shipping 400,000 consoles in the U.S. earlier this month. Namco Bandai said it looks to games for the consoles introduced this month by Sony and Nintendo and a year ago by Microsoft Corp. to account for 10 percent of software sales, or 3.1 million units, this fiscal year ending March 31.
Ventures/Investments
ò The TBS and online shopping giant Rakuten have decided once more to put off tie-up talks for a month, marking the seventh delay following an agreement the two companies entered into at the behest of Mizuho Corporate Bank. A hindrance at the moment is RakutenÆs holding of a 19 percent stake in TBS, which TBS insists Rakuten sell before talks are initiated. Rakuten is reportedly not giving up what analysts agree to be a strong bargaining chip. Rakuten bought its TBS shares for 110 billion yen (US$948 million). If it were to sell them now, it would amount to a loss of nearly US$56 million. Following the earlier agreement to discuss linkages with Rakuten in the field of broadband business, TBS has entered into partnerships with other partners, including the Mitsui & Co. trading house, the Dentsu ad agency and electronics retailer Bic Camera to expand its web-based activities. As part of its agreement with TBS in November this year, Rakuten put nearly half its TBS shares in a trust account with Mizuho. This account is due to expire in March. Industry observers note that when the term is up, the possibility of talks may also disappear. Other facts show that, since the beginning of the year, RakutenÆs own share price has declined by two-thirds, thus diminishing its clout in its dealing with TBS.
ò Kadokawa Group, composed of a group of companies engaged mainly in publishing or movies/visual content, and NTT DoCoMo, announced they will form a comprehensive alliance through a capital tie-up. Under the agreement, DoCoMo will acquire 1,031,000 shares in the holding company, or 3.7 percent of total issued shares, for about 4 billion yen (US$34.6 million) through a third-party share allocation. Under the agreement, DoCoMo will also link up with the group companies Kadokawa Shoten Publishing Co., Ltd., Kadokawa Herald Pictures, Inc., Kadokawa Mobile, Inc., Herald Enterprise, Inc. and Kadokawa Media House Inc. The alliance is seen as fusing together Kadokawa's strengths as a major provider of printed and visual content with DoCoMo's huge subscriber base and i-mode mobile Internet service. The parties will develop mobile content related with Kadokawa movies and animation, including original video content developed initially for the mobile environment, prior to release via other media. The parties will also consider possibilities for DoCoMo to join the film-producing project, which Kadokawa manages.
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