Japan App Store Rapid Growth

Startling facts:

  • Japan app store is expanding faster than expected, especially for apps outside the top 3-5.
  • by Mar 2015, a #10 ranked game will earn ¥1.7bn/m, which is the same as #2 earned in Nov 2013

 

State of mobile in Japan:

Screen Shot 2014-04-10 at 4.13.16 PM

 

 

  • Japan has 10x the USA’s population density, used to spending with carrier (payment) settlement since the 90′s (with iMode)
  • over 30% of households are one-person == spend more on entertainment vs family

Innovation has come to a halt in Japan and indeed on the surface it may seem that way as Japan has always been known for their hardware: Sony and Nintendo the two leaders at the helm.

However the Japanese people are still spending and looking to spend. They are the users and ultimately, paying customers, even if Japanese companies like Sony and Nintendo fail to deliver ‘innovation’.

Isn’t spend more important than who or what is actually delivering?

When I see figures like these:

non-Japanese companies listed in Japan
1991 = 127
2014 =  21

I can’t help but to be baffled. I get the allure of the BRIC countries but China and India are such unique markets with distinct ecosystems. Why wouldn’t a company want to come to a country with consumers who are looking to spend?

One thing is for sure — like I keep repeating — the world is not going to know what hit them when Japan’s smartphone market finally matures and the numbers that will come out of this country will blow people’s minds.

There is still massive opportunity in this country and one of the biggest reasons I am here.

*above from Japan/Korea Market and Japan App Store Macquarie Research reports unavailable to public.
Listed companies in Japan via The FT

noma in Tokyo

This has nothing to do with tech but I just have to share.

noma, one of the top restaurants on the planet is coming to Japan in early 2015.
This is what excites me the most:

Although our entire staff will move to Tokyo, we’ll leave our ingredients at home. Rather we’ll bring our mindset and sensibilities to the best of pristine winter produce from all over Japan.

I’m thrilled beyond words with this news and cannot wait to see how Chef René Redzepi will bring Japanese ingredients with his cooking style to Japan.

For those of you who don’t know noma, please educate yourselves here, here and the chef’s Insta is a must follow.

CAN’T WAIT.

Ren Redzepi in Noma restaurant, which is top of the world's best 50 restaurants for the third year

Popular Communication & Messaging Apps by Country

I spent the past week reading forecasts and reports from Goldman Sachs, McKinsey, Morgan Stanley, Deutsche, etc., etc.

It sounds a bit boring but really not. It was actually fun to read, consume, compare and contrast the different reports.

Quick takeaways:

Deutsche Engagement

Deutsche’s chart of messaging apps used in Brazil, Russia, China, South Korea, Japan and the US.

culture and distro

 

Cross referenced with AppAnnie’s spend by country chart tells us:

  • S. Korea consumes and spends on content. Kakao Talk’s success is likely due to that ecosystem.
  • Japan leads in gaming, explaining the success of gaming companies as Capcom, DeNA, Gree, et al., and the reason the Japanese spend the most in both Google Play and iOS stores. Also explains success of LINE
  • US has wide range of content spend but the US is a distinct market from the rest of the world with different economical factors.

This chart also from App Annie interests me more, as it shows spend vs device:

Device per spend

I agree with Goldman Sachs, stating BRICs (Brazil, Russia, India and China) are 3-5 years away from global scaling and spending.

South Korea, with the highest spend and technological advancements, is like China where the ecosystems are so tightly intertwined it’s a tough market to penetrate. Fun to watch, but just like China, certain models and strategies cannot be emulated because of the reliance on proprietary strong holds.

For people looking to enter markets, Japan, UK and US are the likely bets. Or at least if I were a VC, that’s where I’d be placing bets.

Still digesting but as my thoughts parse, I will be sharing.

Skype: This is Why I Refuse to Use You

Skype You Piece of Shit

What does that even mean up there??? So bizarre.

Sometimes, I have no choice but to use Skype because corporate people are still on there. I only have it on my work computer (a Windows machine) and absolutely refuse to use it for personal communication, deleted off all my devices — so long, farewell, see ya!

Skype is a bloated piece of useless software that hogs my RAM. It’s also broken 90% of the time.

FaceTime, Google Hangouts or even LINE ftw!

WeChat 101- Quit Comparing WeChat and WhatsApp

WhatsApp, Viber, Telegram and Snapchat are not like WeChat, LINE and KakaoTalk.

I’ve written about LINE and KakaoTalk but now it’s time to intro the last player – WeChat. WeChat is not – I repeat NOT anything like WhatsApp or Viber.

Aside from multi-media communication capabilities: photos, video, walkie-talkie and broadcast features, in August of 2013, WeChat completely overhauled their product with v5.1 to add a bunch of new features and functions.

They keep differentiating themselves from the rest of the chat apps and this is why:

  • in-app payments
  • P2P (peer to peer) and O2O (offline-online) core strategy aside from games <– HUGE
  • multiple monetization streams

Payments

WeChat-2

WeChat Payments connects bank card to WeChat account so users can make payments in-app.
Users can make transactions happen through 1. payments to WeChat authorized partner retailers 2. P2P (peer to peer) or in plain English other WeChat users – example: users can send one person a specified amount, or send money to a group and divide the lump sum among a group of friends.  If I had a penny for every time I’ve had issues with group payments where one person pays too much, too little I’d have about four extra iPhones sitting around. Or think about that one person who never has cash, etc., etc. WeChat group payments is the perfect resolution for group events / activities.

O2O / P2P Commerce

WeChat also partnered with sites and services – whether through acquisitions or buying a stake in the company – doing flash sales or becoming the preferred payment partner. To date, DianPing – China’s answer to Yelp, with a Groupon type group buying feature DianPing also offers coupons and discounts and users can even order food for delivery – is one of the most notable.

The other is Didi Dache – China’s Uber – where users can order a taxi and make payments, all in-app. Since forming the partnership in Jan., WeChat reports

  • 21mm cab rides have been booked via WeChat
  • 700k daily bookings via WeChat
  • Didi Dache and WeChat also pay cab drivers bonuses when the drivers use their services vs a competitor

WeChat also aggressively positions themselves as the entry point for global brands who want to reach China’s youths. Most recently, Vivienne Tam and WeChat collaborated to bring NYFW (NY Fashion Week) to WeChat users.

They’ve also done campaigns with Mc Donald’s, Starbucks, Burberry, Pepsi and Maybelline – bottom line, they are making money becoming a payment solution and by advertising as well.

Another monetization channel through partnerships is content. WeChat and Chinese media outlets bring news and entertainment to users. However, instead of solely bringing content into the app like Flipboard or Facebook’s Paper, they have their media partners build proprietary micro-sites into WeChat with proprietary URLs ie: mp.weixin.qq/majorchinesenetwork and charge users subscription fees.

They’ve also ventured into streaming video, launching a standalone TV with CNTV (major Chinese tv network).

If you think that’s all, they are also China’s small business e/m-commerce solution (like Etsy or even Amazon).
Small business accounts are

  • free to create — fee is dependent on level of API customization and how much a business wants to integrate their products and services into WeChat
  • transactions are conducted inside WeChat — which leads to increased time spent inside app
  • bar-code scanner capabilities so people can scan a bar code in a store of something they see and shop for it online for example
  • built in loyalty cards and point card systems

Major brands and retailers to even a college student with a fruit stand can buy and sell on WeChat – that’s how simple it is.

WeChat states they have 300mm active users per month and YoY growth of 124% (note: these numbers are before the Red Envelope campaign that reportedly activated 20mm transactions within 9 days and announcement of all their partnerships).

WeChat is not fucking around.

I’m sure there are so many more features and functions, products and services I may be missing. This is information I gathered through English sources (FT, Economist, WSJ, Techcrunch, The Next Web, Tech in Asia and some random Chinese sites I ran through Google Translate) but even if I don’t know all the details, it’s pretty clear they are one step above the rest of the chat app herd.

One can argue their success is due to the uniqueness of the Chinese market and how the economy is intertwined by a select few and with the government, but strip away all that noise and look at WeChat as a product. They are still several steps ahead of the rest — even LINE, that I am a massive fan of.

2014 is going to be a year to closely watch Asia.

Scale of Chat Apps in Asia

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I don’t think America still understands how big chat apps are in Asia and that’s ok. Like I keep saying, the US is email, iPhone (iMessage), SMS and Facebook Messenger reliant.

In Asia, it costs money to SMS. It costs money to make phone calls. Not as much as Europe maybe, but it still adds up. The US may be the only country where SMS and voice are flat fee, unlimited.

Because we are charged by telecos, chat apps have become a solution to avoid fees for something basic and ubiquitous as communication.

In Asia we are so chat app reliant, my personal and even work emails have been reduced by at least 85%. The only people who actually email are my American friends and colleagues.

Because I stopped relying on email as my main form of communication, I now see what a massive burden email is and how much of my time email dictated.

Chat apps don’t restrict texts with character counts, but because of the context of the core products (real-time interactions, short mail, instant messaging like features and functions), it cuts out a lot of unnecessary bullshit and people just get straight down to the point.

Granted, this is only from my experience and doing business with the Japanese, but I much prefer interacting with colleagues on LINE or company approved Viber as we communicate more efficiently. (Quick contextual background: the Japanese language has four different ways of speech, two honorifics. The honorifics require buffer language — a lot of set phrases before getting to the point. Chat apps tend to cut all that out.)

Aside from the communication utility, chat apps in Asia are evolving from tools to full fledged platforms. I keep repeating this but it’s almost necessary, as there are people still comparing WhatsApp, Viber, Telegram and Snapchat to LINE, WeChat and KakaoTalk. WhatsApp, Viber, Telegram and Snapchat are used for communication only. With LINE, WeChat and KakaoTalk  usres can text, call, video chat, edit photos, play games, get coupons/discounts… and now WeChat allows their users to shop. In their app. Asian chat apps are more than chat apps, they are turning into ecosystems.

The Asia chat app market is truly something else but I think one has to live in China, Korea or Japan to experience the phenomenon for themselves. At least for me that was the case. In a mere six months chat apps have completely changed the way I communicate and also purchase via mobile.

God, I love technology and I love being in Asia seeing, breathing and living the evolving products and market.

Wolfram Alpha

Wolfram Alpha.

There’s been some coverage on Wolfram Alpha over the past month or so. I’m not gonna lie – the only reason I know of Wolfram Alpha is because they hit the news launching a $50 iPhone app way back in 2009 and were ridiculed by the tech crowd.

Fast forward five years and they are back in the news again.

“Now it becomes realistic for someone to build out a complete algorithm and automation system in a few hours.” via Inc.

Venture Beat has a summary that’s more easy to understand – a snippet:

Google wants to understand objects and things and their relationships so it can give answers, not just results. But Wolfram wants to make the world computable, so that our computers can answer questions like “where is the International Space Station right now.” That requires a level of machine intelligence that knows what the ISS is, that it’s in space, that it is orbiting the Earth, what its speed is, and where in its orbit it is right now.

I still don’t fully understand what Wolfram Alpha is, but the notion of conversing with machines pulling up precise results based on scientific data vs now, where we tell machines what to do and look for excites me… and tells me, that Wolfram Alpha is something we should be paying attention to.

Oh, Wolfram also powers Siri.  Stephen Wolfram (found of Wolfram Alpha) and Steve Jobs were friends. Technology that has the stamp of approval from Jobs and a founder with a personal relationship with Jobs is enough for me to create a Google alert. Biased, maybe, but Jobs is a visionary.

Sources: 1, 2, 3 Link #3 – the Venture Beat piece – is highly recommended.