To an outsider, Japan’s mobile market presents a paradox. On the one hand, mobile phones are so ubiquitous that keitai culture (mobile culture) is an entrenched concept in Japanese society. On the other hand, even as smartphone penetration grows, feature phones remain stubbornly popular, according to recent eMarketer data. While some observers chalk that paradox up to Japan’s ageing population, my experience on the ground in Japan over the past two years tells a different story, one that’s especially relevant to mobile marketers looking to tap into the Japanese market.
Japan is an Island
On a map, it’s easy to see that Japan is a nation of islands, but that feature of its geography can’t be understated. With a history of building strong technology brands (Sony, Mitsubishi, and Toyota come to mind), Japan ought to be leading the next wave of digital startups. But by and large, Japan hasn’t contributed to the mobile revolution in the ways that other similarly advanced economies did. In fact, Japanese startup culture has only recently begun to awaken.
Historically, a Japanese firm had to grow as big as a Sony or a Toyota to get off the island and enter the global economy. But that kind of growth isn’t possible in the digital age if your firm is limited to a user base of 126 million people. As a result, Japanese startups have struggled, not because their technology is bad, but because they can’t compete with firms in China and the U.S., which are able to leverage user data on a much bigger scale.
As an Israeli, I empathize with that challenge. But one advantage of working for a startup from a country with only eight million people is that you know on day one that you have to think globally in order to achieve scale. That’s just not the case in Japan, where the population is big enough to justify investments in domestic technology, but not small enough to force those startups to look beyond the island.
Innovation is valued, but disruption doesn’t come easily
Silicon Valley startups see company culture as a key driver of success, and while cultures vary by startup, one word is always present: disruption. For Israeli startups, disruption comes naturally because it’s a feature of our larger society. But in Japan, disruption often feels more like a bug than a feature. After all, Japanese society is both homogeneous and hierarchical.
From a foreign marketer’s perspective, two aspects of Japan’s aversion to disruption stand out. First, by deferring to the hierarchy and avoiding conflict, new ideas, particularly those from younger employees, take a long time to percolate through the organization. Second, the advertising marketplace is highly concentrated, making it difficult to execute disruptive ideas.
That’s not to say Japan is incapable of innovation. In fact, just the opposite is true—Japan produces incredibly innovative technology, on their own terms. In order for foreign marketers working in Japan to succeed, it’s critical to reset your timeline and expectations for disruption. To aid that process, it’s a good idea to seek out Japanese employees who have lived and worked abroad to help you navigate the cultural divide. And most important of all, foreign marketers need to understand that building trust takes an especially long time in Japan, which means that disruptive ideas that come from abroad face an additional hurdle before they can even be heard.
Mobile gaming is a global force, but the Japanese take it to the next level. Regardless of age or gender, virtually everyone in Japan has their favorite mobile game. But not only is gaming incredibly popular in Japan, on a per-player basis Japanese gamers spend about 50 percent more than their North American counterparts and 150 percent more than players in Europe. Nevertheless, it’s important to understand that while Japanese consumers are incredibly mobile-savvy, especially around games, mobile advertising isn’t as robust as markets like the U.S.
While there’s a lot of opportunity for growth in Japan’s mobile advertising sector, the cultural challenges of doing business in Japan mean that capitalizing on that growth opportunity isn’t going to be an overnight proposition. That’s a hard pill to swallow if you’re coming from the U.S., China, or even Israel, where startups are as eager to disrupt as consumers are eager to embrace the hot new thing. But a slow rate of change isn’t a reason to overlook the Japanese mobile market. On the contrary, it’s a reason to seek out the right partners and invest in Japan today. While Japan may not ride on the cutting edge of the mobile revolution, its tradition of building quality technology brands and a sizeable mobile-savvy population make Japan an indispensable piece of the emerging mobile scene that’s transforming the globe.
Rivi Bloch is division CEO at Taptica.