Amp'd to Tap Japan's Mobile Market

Amp'd Mobile is the latest gaijin to set its sights on Japan's sophisticated cellular market. Is the upstart up to the task?

by Olga Kharif

Each week, wireless service provider Amp'd Mobile features a five-minute cartoon series called Lil' Bush. In it, the main character and his foul-mouthed, wise-cracking sidekick, Lil' Cheney, embark on such adventures as picking fights with Lil' John Kerry and taking class field trips to Iraq. It's not your typical mobile-phone company fare.

Then again, Amp'd isn't your typical mobile-phone company. That was made plain on Oct. 31, when Amp'd Mobile, a U.S.-based provider of wireless service to young professionals and early adopters, announced it would make an audacious play for the Japanese market. Amp'd will make its content available to 20 million wireless subscribers of Japanese operator KDDI beginning in March.

The deal is raising eyebrows for a few reasons. First, Amp'd is attempting to export mobile content into Japan, long considered one of the world's most advanced wireless societies. In the past, it was Japanese companies such as NTT DoCoMo that exported their wireless-content expertise to the rest of the world. In June, Amp'd reached a deal to make mobile games from Japanese studio Square Enix available in the U.S. "Japan, in the mobile world, has been very innovative, so, for a while, exporting mobile content to Japan was like selling coal to Newcastle," says Ken Hyers, an analyst with consultancy ABI Research.

Cutthroat Competition

But that's changing. Long lagging behind their Japanese counterparts in wireless, U.S. carriers have upgraded their networks, so they too can deliver cool music, video, and other nonvoice data. And various U.S. companies, like Amp'd, whose investors include media heavyweights MTV Networks (VIA) and Universal Music Group, have begun producing world-class mobile content. And, it turns out, some of the world's other markets, including Japan, are hungry for it.

Japan's wireless market is in flux. In October, Japan implemented so-called number portability rules that let wireless subscribers keep their phone numbers when switching carriers. The result: an ebb and flow of subscribers so strong that carrier Softbank reportedly had to stop accepting new customers for a spell.

Competition among Japanese carriers NTT DoCoMo, KDDI, and Softbank, a broadband heavyweight with connections to Yahoo! (YHOO), is already cutthroat. But now it's intensifying (see BusinessWeek.com, 3/17/06, "Softbank-Vodafone Deal Rings True").

Third-Party Opportunities

Having acquired the wireless business from Vodafone (VOD) earlier this year, Softbank CEO Masayoshi Son has vowed to attract customers with lower prices, a greater variety of new handsets, and better content from partners such as Yahoo. The company is also actively looking to strike more content distribution deals similar to the one between Amp'd and KDDI, says Andrew Cole, president of consultancy CSMG-Adventis.

For Softbank as well as its rivals like KDDI, differentiation through content has become key to survival. "Suddenly, the market has opened up to third parties," says Cole. And Amp'd could be only one of many U.S. mobile-content companies to take advantage of that. Already, in June, Warner Music Group (WMG) took a minority stake in Japan's FrontMedia, a mobile-radio firm that will now use Warner's content, for example.

U.S. content providers may be uniquely positioned to succeed in Japan because "Japanese content is localized, there's not a lot of Western content," says Stone. "No one brings the total Western experience." Amp'd creates 20% of the content it makes available to users in its own studios. It also offers a lot of exclusive content from investors such as MTV.