Current Status of the Mobile Market in Japan

Internet-enabled mobile phones have been a major phenomenon in Japan since February 1999
when the nation’s largest mobile phone operator, NTT DoCoMo, introduced its i-mode service. The
new service was branded with a lowercase “i” to signify the world of information mobile users could
now access via the Internet using only their phones. The popularity of i-mode took the market by surprise
and established i-mode as a model for success that was quickly emulated by Japan’s other mobile operators.
Today, mobile Internet in Japan has established itself as arguably the fastest-growing mass media
platform the world has ever seen, reaching an audience of 50 million people in only three years. This is
less time than it took for the U.S. market to hit the same milestone with radio (38 years), television (13
years), cable TV (10 years), and the PC Internet (five years). About 85 million Japanese mobile users are currently signed up and connected to the Internet on their phones, a penetration of about 67 percent
of Japan’s total population of 127 million, and comprising 87 percent of Japan’s 98.65 million mobile
phone subscriptions. Conveniently, the user base for mobile phones in Japan spans roughly the same
audience of 15- to 65-year-olds being targeted by corporate marketers. In addition, the majority of
these users are post-pay customers, meaning payments are debited monthly from their bank accounts.
This allows mobile network operators to carry on an active and direct merchant relationship with
this huge customer base. In order to reach these mobile users for advertising and marketing
purposes, mobile marketing systems that were optimized to exploit this mobile infrastructure were
implemented in June 2000 when NTT DoCoMo and advertising agency Dentsu joined forces to establish
D2 Communications. Since then, mobile advertising and marketing have shown steady growth.
Mobile advertising is expected to have the highest growth among Japan’s advertising sectors, reaching
three times its current size by 2010 at more than 1.2 trillion yen (approximately $1.07 billion), and
it is anticipated to comprise 2 percent of all advertising spending in Japan, according to data published
by the Dentsu Research Institute in April 2007.