online & internet companies - japan

5 Key Players in Japanese eCommerce & Online Media

Takeaways from Latest Investor Presentations

www.gantrysolutions.com

5 Key Players in Japanese eCommerce & Online Media Show Rapid Shift to Mobile Internet

• Takeaways on 5 companies from Recent IR Presentationso Cyberagent - http://bit.ly/gcJ3tw - Aims to be #1 Social Application Provider o Rakuten - http://bit.ly/eECU9v - Pursuing Foreign Acquisitionso Gree - http://bit.ly/embkFN - Increasing Games from 3rd-party Developerso DeNa - http://bit.ly/gV8UQw - Aims to Compete Globally in Mobile Gameso Yahoo Japan - http://bit.ly/dO4Hqr - Joint Ventures in Japan, Capitalize on Portal

• Keywords o ecommerce, finance, mobile games, user content, social apps, global, japan,

m&A, developments, platform for 3rd-parties, online ads, smartphones, finance• Relationships

o Yahoo J has a JV with DeNa in Online Gaming (Yahoo Mobage)o A Cyberagent subsidiary supplies games to Gree's Game Platformo Cyberagent, Gree, DeNa all play in Social Applications space, Mobile Gameso Rakuten and Yahoo J compete in eCommerce, with DeNA also in eCommerceo Rakuten and Cyberagent have significant finance businesseso Yahoo J's rel. to Softbank, which has portfolio of telecom, online businesseso Yahoo J and Cyberagent have online ad businesses, while Gree is in Mobile ads

Disclaimer: Gantry Solutions is not advocating or recommending investments in any of the above companies, nor will take responsibility for the accuracy of data supplied by companies in their public filings, submissions or statements.


Cyberagent is a Major Online Player in Japan


Cyberagent Growing via Online Games, Content & Ads in Both Mobile and PC Segments


Cyberagent Increasing Profits in the Mobile Space by Providing

Games to other Platforms

Increasing Focus on Mobile among SNS Players Fuels

Demand for Compelling Mobile Content such as

Games


Rakuten Increased the Number of Lower-margin Business Segments but Lost Focus


Non-core eCommerce Services Almost 50% of Revenues but Drag on Margins


Rakuten Increasing Users,Transactions but Avg # and Value of Transactions Decreases

A Mobile Game SNS in Japan with Rapid Growthwww.gantrysolutions.com

Gree has Two Revenue Pillars: Paid Games & Adswww.gantrysolutions.com

Steady Member Growth at this Mobile Game SNS


DeNA'S eCommerce Business is Static

Sales Increase by 2.5x the Past Yearwww.gantrysolutions.com

DeNA's Users are Younger, 65%<30 yrs Old but Spend Less than Older Newcomers

Advertising & eCommerce are Traditional, Ongoing Strengths of Yahoo Japan

Yahoo Japan's Online Ads Show Diversified Customer Base but No Mobile Breakout



Shows Little Growth in Avg Value of eCommerce Transactions

Company Comparison: Key Metrics

Market CapCyberagent: 123B JPY DeNA: 456B JPYGree: 253B JPYRakuten: 900B JPYYahoo J: 1,800B JPY


Employees (Hold./Tot.)Cyberagent: 768/ 1,677DeNA: 450/ 873Gree: 216/-Rakuten: 3,080/ 7,025Yahoo J: 3,586/ 4,763

Age/Avg SalaryCyberagent: 29.4 6.9MDeNA: 31.1 6.2MGree: 29.4 7.0MRakuten: 31.4 6.8MYahoo J: 33 5.9M

No. of SubsidiariesCyberagent: xxx DeNA: xxxGree: xxxRakuten: xxxYahoo J: xxx

New Generation of Consumer Focused IT centric Companies

• These companies build a platform for one or more software applications

• Fee-based revenue and ad revenue balance each other, with paid services a strong feature of platforms

• eCommerce is one of the lines of business

• Overseas M&A is a key part of expansion plan

• Japanese online consumer market attracted to new content/services

• Companies have to increasingly invest in promotion to drive member growth

• Danger of sprawling into lower-margin adjacent products and services to maintain growth

Similarities Challenges

Trends 1. FX volumes decreasing because of a cap on retail

investors' leverage 2. Increase of smartphones and mobile devices in Japan3. An aging population in Japan will impact consumers, and

their behavior

Questions1. Will the social gaming companies be bought by any of

the traditional gaming platform companies as seen in the US?

2. Will investment by the companies in R&D and Recruiting be able to keep up with the competition?

3. How can the companies handle change in technology trends, markets, consumer tastes?

online & internet companies - japan

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