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What's New  May 2003

Market Snapshot - Japan
Internet VOD

Each month the Japanalyzer takes you inside one of Japan’s IT industries- showing you who’s who and where the market is heading. This month we focus on the upcoming Internet Video on Demand (VOD) market, which promises to give Japanese broadband users a new channel for entertainment while presenting telecommunications carriers with additional revenue opportunities. Japan’s activity in this area mirrors some of the activity occurring in the US with one exception- superior end user bandwidth. While most US DSL or cable customers are stuck at 1 Mbps, an increasing number of Japanese have Fiber to the Home (FTTH) which can clock in at speeds of up 100 Mbps. US Carriers have long been talking about the triple play (voice, video, data) as the way to finally beat Cable in the Broadband race. In Japan , that talk may soon start to look like reality with the announcement by several Japanese Carriers that real Internet VOD is soon to come.

The most recent company announcement comes from you guessed it, Softbank. The company that sparked the DSL price war and ensuing revolution in Japan (through Yahoo BB) is now turning its attention to making even more money off its efforts, through VOD. After a 6 month trial, Softbank’s Broadmedia subsidiary announced in March of this year that it would offer Yahoo BB customers its BB Cable TV service. The service is currently limited to Tokyo and costs around $82 for setup along with a $21/month set top box rental fee. The basic service includes 19 channels but 3 additional channels are available as an option. Users can also purchase movies and other Video content on Demand at prices ranging from $2.50 to $6.50 per item. Yahoo’s VOD service looks, acts, and feels a lot like Cable TV only the delivery mechanism is DSL.

Competing with Softbank are companies like NTT Data, a spin out from NTT whose affiliate Solid Exchange, plans on providing content via ADSL and FTTH using Broadband network PCs and set-top boxes. Underlying NTT Data’s content is a relationship with US-based Cinema Now who recently inked a distribution agreement with the company. CinemaNOW is one of the few IP-based Video-on-Demand (VoD) subscription services still in existence (competitors like Intertainer and Movies.com are gone). CinemaNow, which recently signed a distribution deal with MGM, is majority-owned by Lions Gate Entertainment, Microsoft, and Blockbuster. Of the company's 3,000-title film library, a subset of movies (approximately 250) with international distribution rights, are to be translated into Japanese with subtitles and made available to Broadband users in Japan.

More announcements in the Internet VOD space are sure to follow, driven largely by the excitement over rapid high-speed Broadband proliferation. The slow rise of VOD in the US is often attributed to the poor performance that comes with typical DSL. But in Japan, user proximity to the telecommunications infrastructure yields much high performing DSL and FTTH, as a realistic service. Last month, the Ministry of Posts and Telecommunications reported that as of March 31 2003, there were already 8.8 million broadband subscribers in Japan (~20% of households), an increase of over 500,000 (6%) from the previous quarter. Of this increase, over half were from FTTH technology which can bring enormous Internet speed to ordinary home users. The Ministry is expecting that there will be more than 10 million subscribers by the end of May, with much of the increase derived from FTTH.

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This Month's Bridge Builder
Featuring the real voice of IT across the Pacific

May, 2003 

Connecting the Bay Area to Japan
Mr. Christopher J. Sigur, Executive Director, the Japan Society of Northern California

When it comes to US cities that profess a strong link to Japan, San Francisco is to many, the most influential. From serving as the site of the 1951 Treaty of Peace with Japan to today’s role as the gateway for Japanese firms into the US IT industry, the San Francisco Bay Area is simply the de facto hotspot for transactions between the two countries. As the Japan Society that represents this connection (there are 38 in the US), the Japan Society of Northern California often plays an important role in facilitation between the two cultures. As the organization’s Executive Director Mr. Chris Sigur puts it “ the Japan Society of Northern California is one of the largest and second oldest Japan Societies in the US… It also the most significant given the history and regional focus in technology.” Mr. Sigur had lots more to say about the mission of the Japan Society and his role in bridging the cultures when we sat down recently to chat with him about his experiences and thoughts on the future. This month’s Bridge Builder features the key points from this interesting discussion.

Q. Please tell us about your background. How did you get interested in Japan and other Asian countries?

A. My interest in Japan started when I was a child because I lived there for eight years, during my elementary to high school years. While at college (Georgetown), I studied the Japanese language and then continued to study the culture while getting graduate degrees at Johns Hopkins and Columbia. Early in my career, I joined the Peace Corps serving in Korea then worked for The Asia Foundation as Representative in the Korea office. While at the Asia Foundation, I served as Assistant Representative in Indonesia, and as Executive Assistant to the President in San Francisco. Before I was appointed Executive Director of the Japan Society, I had served as Vice President for Asia at the Carnegie Council on Ethics and International Affairs.

Q. What attracted you to your current position and how would you define your current mission?

A. I had been working in Tokyo through my work in relation to the Carnegie Council, when I first heard about the position. At that time (1997), the Japanese economy was still staggering but the US IT sector was beginning to show signs of a boom. I thought that given the age and size of the organization and its relationship with Silicon Valley, there would be tremendous potential for growth. During the first few years, we were able to take some advantage of the dotcom bubble but mostly its been an “up and down” experience. However, the mission remains the same- to promote US-Japan relations. Our location gives us a focus on high technology but we are not just about business. We try to give our sponsors a cultural context for their relations with Japan.

Q. Please elaborate a bit on the history of your organization. How does it distinguish itself?

A. The Japan Society of Northern California can trace its roots back to 1905 when a lawyer in Palo Alto named Henry Pike Bowie came together with others, who shared an interest in Japan, to found the organization. The organization started out as the Japan Society of San Francisco and had strong ties to Stanford and the Japanese Consulate (Japan’s first in the US) from the beginning. Over the years, there have been ups and downs but in the 80’s and 90’s we developed a clear focus on business. Today, we try to distinguish ourselves by focusing not just on business but on people- because doing business with Japan means building relationships. Our organization is the second oldest member of the NAJAS (the National Association of Japan-America Societies), which includes 38 Japan and Japan-America Societies in the United States and Canada.

Q. In addition to Japan, you’ve worked with many Asian countries on behalf of US interests. Comparing Japan to other Asian countries, what comes to your mind as some of the key characteristics about Japan one should remember.

A. Japan’s culture is simply so unique, it’s difficult to define. For Americans, there is a special historical connection that may not come up day-to-day but its there nonetheless. Japan has been an economic powerhouse for so long that the American interest is just natural. One point I recommend for those doing business with the Japanese is to do one’s homework because that’s what they do. Thorough due diligence on potential Japanese partners is critical to maintaining an equal footing.

Q. In your tenure at the Japan Society, you’ve had some great events with a clear impact on Japan-US relations. Which one was the most significant?

A. From September 6-8, 2001, we hosted a celebration and conference of the US-Japan relationship, the US-Japan 21st Century Project, a series of events to commemorate the 50th anniversary of the signing of the San Francisco Peace Treaty between the United States and Japan. U.S. Secretary of State of Colin Powell, Japanese Foreign Minister Makiko Tanaka, Former Japanese Prime Minister Kiichi Miyazawa (who attended the signing of the 1951 Peace Treaty as a junior Ministry of Finance official), and CEO of Hewlett-Packard Company Carly Fiorina, participated as keynote speakers. One of the panels featured all the former American ambassadors to Japan, chaired by Howard Baker the current ambassador. We believe the US-Japan 21st Century Project was the most significant gathering of business, academic, and political leaders of the United States and Japan in the last 20 years. Going forward, we will be working with the National Association of Japan-America Societies who will be coordinating the Celebration of the 150th Anniversary of US-Japan Relations.

Thank you Mr. Sigur. Individuals and companies that are interested in finding more about the Japan Society of Northern California, please see their website.


Previous Interviews

Upcoming Events,

Networld + Interop 2003 Tokyo
July 2-4, 2003 Tokyo Makuhari Messe (Nippon Convention Center
The 10th NetWorld+Interop Tokyo introduces leading edge technology and products that reflects the market and technology trends. This year there will be a new exhibit zone "Media broadcasting" in addition to existing zones: Network Infrastructure, Carrier Services, e-Platform & Software, Security and Mobile/Wireless.

SODEC : 12th Software Development Expo & Conference in Tokyo
July 9-11, 2003 Tokyo Big Sight (Tokyo International Exhibition Center)
Features technology and tools to support software development, maintenance, and operation for business systems and engineering systems. The conference is run concurrently with with te ESEC / DWH & CRM EXPO and the Data Storage Expo and Conference.

ExpoCom Wireless Japan 2003
July 16-18, 2003 Tokyo Big Sight (Tokyo International Exhibition Center)
An exhibition of wireless broadband, mobile internet, 5GHz/2.4GHz W-LAN, 3G application/contents, hot spot, internet ITS & telematics, mobile IP, bluetooth, CRM/SFA, and security technologies.

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