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How ScaleOut plans to evolve Japan’s ad-tech market [Interview]

Takeshi Hirano 2013.08.06

IMGP0051 — From the left: Nobot CEO Kiyotaka Kobayashi, Mediba CEO Takashi Ohasa,
ScaleOut CEO Daisuke Yamazaki, and ScaleOut CMO Kenichi Sugawara

See the original story in Japanese.

There was a big move in the Japanese ad-tech market yesterday. Mediba, an ad-focused subsidiary of Japan’s second largest telco KDDI, announced its takeover of ad-tech startup ScaleOut. The purchase price was not disclosed but it’s reportedly worth more than 1 billion yen (10 million dollars). Some of our readers may recall that Mediba acquired smartphone-focused ad network startup Nobot back in August of 2011.

ScaleOut’s CEO Daisuke Yamazaki previously worked with Yahoo Japan where he launched behavioral targeting and rich media ads. Yuzuru Honda, the founding CEO of competing ad-tech startup FreakOut is also known for having sold content-matching ad platform Brainer to Yahoo Japan. Yahoo Japan seems to have produced many men of talent in the space.

There were very few platforms that could provide 10 billion monthly impressions when we launched our company

When Mr. Yamazaki launched ScaleOut back in 2006, the market was not as mature as it is today. He explains:

There were very few platforms that could provide 10 billion monthly impressions when we launched our company. Since the market has no concept about RTB (real-time bidding) advertising, we developed an ad distribution platform which can steadily provide ad impressions for media companies.

Subsequently we launched a RTB-enabled DSP (demand-site platform) service since the market trend was being shifting to RTB advertising. In terms of focusing our resources on our core business, we wondered if we should stop receiving outsourced business. Based on discussions with with Mr. Hiroyuki Watanabe [1], we made up our mind to concentrate on providing DSP services.

Scale Out was founded back in 2006, and launched DSP services back in 2012. That means they have been working on it for about five years. In terms of focusing on DSP services, B Dash Ventures helped them make the significant decisions. Yamazaki added:

Our system development didn’t proceed as expected, and we had some money problems. But Watanabe helped us a lot both mentally and financially. Up until we invited CMO Sugawara to our board, everything around our business was decided based on discussion with me and Watanabe.

Watanabe knows the ad-tech startup industry since he also helped other startups in this space, such as Nobot. Mr. Watanabe explained:

Prior to investing in the startup, I shared my perspective on the future of the Japanese ad business and ad-tech industry. Based on that, Mr. Yamazaki and I completed the startup’s management policy and business plan together. To bring more talent to the board, we invited Mr. Sugawara as a supervisor for sales and marketing.

Why has ScaleOut partnered with Mediba? Yamazaki raised the recent smartphone shift as a reason. He explained:

To date, online advertising has been targeting PC users, and smartphone ads have no big share in the market. A smartphone ad is typically placed in a limited space but shares much space on the screen. For users, you typically check information resources briefly with a smartphone, and maybe dig deeper on a PC.

If we can provide clients with solutions that allow them to see user behaviors across multiple platforms, that would be a significant differentiation point. For clients, in terms of drawing user attention, smartphones will definitely work better than PCs. We learned this after we’ve switched to DSP services, and also learned this meets the KDDI-Mediba ‘3M’ strategy [2]. That’s one of major reasons why we’ve partnered with Mediba.

To date, online advertising has been targeting PC users, and smartphone ads have no big share in the market.

We should also mention the company’s own technology called Data Management Platform, DMP for short. The startup formed a team focused on data analytics, and will launch an ad service using much accumulated user behavioral data. Yamazaki added:

I assume most ad networks will change ad distribution in the future. They will typically pick the best choice of available ads using behavioral data analytics. If we can launch a platform for ad distribution across multiple browsing devices, we can distribute the best ad optimization to every single user. Google is the biggest holder of big data accumulation, but KDDI-Mediba dominates the Japanese market in this space.

Ads may be noisy for users sometimes. And in order to provide users with ads that serve as useful information or recommendations, we need to evolve in partnership with KDDI-mediba.

Based on the analysis of enormous user data using the company’s DMP technology, their clients can distribute the best optimization of ads to their users through the platform.

Adtech startups don’t typically expose much about what they provide, but we’re glad to have a glimpse into that ScaleOut has in store. Let’s wait and see how this particular acquisition will impact the Japanese ad industry.

The CEO of B Dash Ventures. He invested in the startup and joined its board back in April of 2012. ↩
This represents KDDI-mediba’s business strategy, referring to multi-device, multi-network, and multi-media. ↩

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User-generated travel plan startup Trippiece raises $2M

Takeshi Hirano 2013.08.06

See the original story in Japanese. Tokyo-based travel startup Trippiece announced today that it has raised 200 million yen (approximately $2 million) from Draper Nexus Venture Partners and other investors [1]. With the funds, the startup plans to start developing smartphone apps. The company also invited Fumiaki Koizumi to the board of directors. He previously worked with Mixi and DeNA where he helped them IPO. At Trippiece, his main role will be to strengthen the management. We expected social media could help get the word out about the website, but this wasn’t the case. It has been more than a year since Trippiece formally launched back in January of 2012. Currently there are nearly 1,400 travel plans available on the site, and 100 to 200 users take trips using those plans every week. Management operations behind the scenes have become stable, and the startup plans to further improve that with the funds. CEO Ian Ishida explained that it hasn’t been a smooth ride for the company so far. The power of social media didn’t quite live up to their expectations. Trippiece is comprised of many small travel plans. We expected social media could help get the word out about the…

See the original story in Japanese.

Tokyo-based travel startup Trippiece announced today that it has raised 200 million yen (approximately $2 million) from Draper Nexus Venture Partners and other investors [1]. With the funds, the startup plans to start developing smartphone apps.

The company also invited Fumiaki Koizumi to the board of directors. He previously worked with Mixi and DeNA where he helped them IPO. At Trippiece, his main role will be to strengthen the management.

We expected social media could help get the word out about the website, but this wasn’t the case.

It has been more than a year since Trippiece formally launched back in January of 2012. Currently there are nearly 1,400 travel plans available on the site, and 100 to 200 users take trips using those plans every week. Management operations behind the scenes have become stable, and the startup plans to further improve that with the funds.

CEO Ian Ishida explained that it hasn’t been a smooth ride for the company so far. The power of social media didn’t quite live up to their expectations.

Trippiece is comprised of many small travel plans. We expected social media could help get the word out about the website, but this wasn’t the case. The community only became active when we acquired 20,000 users.

If a user-generated travel plan has more than five users apply to join, the startup will arrange a tour using its partnerships with travel agencies. Right now the service has more than 50,000 users, but they need to acquire more to keep going along their planned roadmap.

IanIshida_snapshot — Trippieace CEO Ian Ishida

The startup is about to launch a corporate membership system, with intended account holders being talent agencies or other businesses that have many fans. Trippiece is also planning to arrange tours accompanying entertainers or performers. We don’t know too much about this, but we understand they are in talks with several agencies right now.

Their user base is not large enough for a social media network. But they have improved their business model enough to step forward to the next stage.

Whenever I meet up with Ishida, he usually talks about his love for the service, and it’s good to have someone like that at the helm. It will be fascinating to watch him evolve this unique travel experience moving forward.

Trippiece started out back in March of 2011, receiving seed funding worth 3.5 million yen from Samurai Incubate Fund. Subsequently, the company also received 5 million yen from Movida Japan.

Technically, the service name and company name (trippieace) are different in spelling for some reason. ↩

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Monetizing mobile content is a piece of cake for young Japanese startup

Yukari Mitsuhashi 2013.08.05

Japan can be a great market for digital content, as the consumers in this country are very accustomed to paying for it. Our readers may recall our previous article about how there is a Japanese culture of paying for newsletters. One startup here in Japan is again proving there is opportunity in this space, with the firm belief that consumers will pay for good content. The platform is called Cakes, and the folks behind this mobile reading app are serving up some tasty stories to Japanese readers. We recently had a chance to briefly speak with Jun Haranaga, the CTO at Piece of Cake, the company behind the content platform, and he told us a little more about what they’re up to. Cakes launched back in June of 2012, and currently there are over 180 writers/creators on the site, with more than 2,500 posted to date. Back in April, the company nabbed three hundred million yen from two venture capital firms in Japan. In the future, the online media and traditional offline media will merge. This change is taking place already. Typical users of Cakes are of the bookworm variety, paying a weekly fee of 150 yen ($1.50) to read…

cakes-app — Mobile content platform ‘Cakes’ (cakes.mu)

Cakes launched back in June of 2012, and currently there are over 180 writers/creators on the site, with more than 2,500 posted to date. Back in April, the company nabbed three hundred million yen from two venture capital firms in Japan.

In the future, the online media and traditional offline media will merge. This change is taking place already.

Typical users of Cakes are of the bookworm variety, paying a weekly fee of 150 yen ($1.50) to read all content available on the site. Some creators are well-known manga artists or novelists, and many of the up-and-coming creators have been carefully selected by Cakes. Cakes tries to provide the experience of being at a bookstore in an online environment, making lots of inspiring content available so you can always find something interesting on your book shelf.

Haranara explains the company’s take on the future of online media:

We think that the ultimate format of digital content is not ePublication, but rather the web. In the future, the online media and traditional offline media will merge. This change is taking place already. When this happens, we will see lots of ups and downs for all content and all players. We want to help those who write, and focus on building a cutting edge media platform.

For Cakes, writers, creators, and publishers are all potential clients, as these people all seek ways to market and monetize their content. One such initiative is the Million Seller Project, where the Japanese entrepreneur and internet tycoon Horie Takafumi began a column on Cakes. Those posts were put into a book, which was subsequently released by major publisher Diamond.

What was interesting about this new sort of ecosystem is that the book’s revenue was distributed to all involved parties, including editors and writers. Another book published in this way is called The Most Powerful Learning is Economics which so far has sold 250,000 copies.

Japan can be proud of its content and culture

Interestingly, Cakes sees potential for its business beyond Japan, and has set up offices in Singapore and Vietnam. Haranaga and his engineers are working from Singapore, and other development projects are in progress in Vietnam as well. He explains:

One of the things that Japan can be proud of its content and culture. So in the future, we definitely plan to distribute these things outside of Japan. Singapore is the hub of Asia, and we found that there are excellent engineers in Vietnam after we held an app development competition there. By establishing bases in other parts of Asia, we believe we can accelerate the development process for our platform.

Cakes released its iPhone app back in May of this year, and an Android version will be released very soon. The company is also working on its iPad app, which is expected to be released sometime between summer or fall.

Premium online content has been tried many times before, but it still struggles at times and is in need of further experimentation. There is certainly lots to learn from Japanese content ventures like Cakes, MaguMagu, or Magalry, a newsletter service operated by GREE. It will be interesting to see how Cakes will fare beyond its home country, so stay tuned to find out!

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GREE gives up on its messaging app

gree
tellit

Masaru Ikeda 2013.08.05

Japan’s social gaming giant GREE launched a messaging app late last year. Dubbed Tellit (originally called GREE Messenger), the app was a quiet entry in a very crowded field of players like Line, Kakao Talk, and DeNA’s Comm. At the time, we understood that it was somewhat of an experimental effort — and now that experiment will be coming to a close, as GREE recently announced it will shutdown the messaging app on September 1st. The app was developed by eBuddy, a messaging app-focused company based in Amsterdam, and subsequently rebranded as Tellit to intensify the global marketing efforts. TechInAsia points out that it previously topped the free iOS rankings in Malaysia, Italy and Germany, and our own digging shows that it also reached the top of the social networking category in Thailand, Chile, Yemen, and Saudi Arabia. Here in Japan, the app didn’t get any TV commercial blitz that we saw competitors like Line, Comm, and KakaoTalk receive. GREE is planning to shutdown its offices in UK, UAE, Brazil, and the Netherlands this month, which reduces its foreign business locations by a half. The company also shutdown its Beijing office back in May, and is planning to reduce its…

The app was developed by eBuddy, a messaging app-focused company based in Amsterdam, and subsequently rebranded as Tellit to intensify the global marketing efforts. TechInAsia points out that it previously topped the free iOS rankings in Malaysia, Italy and Germany, and our own digging shows that it also reached the top of the social networking category in Thailand, Chile, Yemen, and Saudi Arabia.

Here in Japan, the app didn’t get any TV commercial blitz that we saw competitors like Line, Comm, and KakaoTalk receive.

GREE is planning to shutdown its offices in UK, UAE, Brazil, and the Netherlands this month, which reduces its foreign business locations by a half. The company also shutdown its Beijing office back in May, and is planning to reduce its work force in its Korea office by 30%. The focus of its international operations are expected to shift to San Francisco, though it still has its studio and office in Korea and its GREE Ventures operation in Singapore.

Some of our readers may remember that there were reports that DeNA recently cut back operations on its Comm messaging app. For GREE and DeNA, it’s probably necessary for them to find new frontiers where they can find more success.

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As Puzzle & Dragons expands, complementary content springs up too

Rick Martin 2013.08.05

GungHo Entertainment’s hit game Puzzle & Dragons is probably the most successful mobile game in history, at least in terms of revenue. In the last quarter, the game was making almost $5 million per day. The game has 17 million users in its home market of Japan, but up until just recently we haven’t had many metrics on how it has been doing in North America [1]. Now the game has now reached the 1 million downloads mark in that region, which is still not very much – but it’s a good start. P&D peaked number 7 on the top grossing charts, and it will be interesting to see if it can making good money in that market. Most people outside Japan likely still relatively new to the game. And speaking as a fan of the game myself, I admit it can be a little tricky to understand at first. I’ve given a little bit of an introduction and how-to video for Puzzle & Dragons here if you’d like to check it out. But one of the reasons that I’m optimistic about P&D is the fact that we’ve seen various peripheral fan content and utilities springing up around it. There…

GungHo Entertainment’s hit game Puzzle & Dragons is probably the most successful mobile game in history, at least in terms of revenue. In the last quarter, the game was making almost $5 million per day.

The game has 17 million users in its home market of Japan, but up until just recently we haven’t had many metrics on how it has been doing in North America [1]. Now the game has now reached the 1 million downloads mark in that region, which is still not very much – but it’s a good start. P&D peaked number 7 on the top grossing charts, and it will be interesting to see if it can making good money in that market.

Most people outside Japan likely still relatively new to the game. And speaking as a fan of the game myself, I admit it can be a little tricky to understand at first. I’ve given a little bit of an introduction and how-to video for Puzzle & Dragons here if you’d like to check it out. But one of the reasons that I’m optimistic about P&D is the fact that we’ve seen various peripheral fan content and utilities springing up around it. There is the Puzzle & Dragon Database, the Puzzle & Dragon Forum, and an active sub-Reddit. In addition, their Facebook page now has over 42,000 fans.

And recently there is also the app PadGuide which is a really big help for newcomers to the game. In P&D, there are lots of events that suddenly occur which offer an opportunity to collect rare monsters – but the problem is that you don’t really know when they are going to happen. What PadGuide offers is a calendar of upcoming events so that you can be a little more opportunistic about when you play – you can even set alarms for specific events.

The app also has a library of the games monsters and dungeons, which is handy if you need to check what monsters you’ll meet so that you can prepare your team accordingly.

The app comes from Korean developer D&Tech Consulting, and is available for free with some ads displayed. Surprisingly this app recently broke into the top ten in South Korea’s iOS Utilities category. That’s not too bad for a simple game-tips app of this sort.

On a related note, Puzzle & Dragons also recently surpassed 1 million users in Korea. So GungHo’s strategy is clearly to focus on mature mobile markets where consumers are known to spend money.

It will be interesting to see if they make a move to go after the relatively mature markets of Taiwan and Hong Kong too, perhaps as a testing ground before later hitting the larger but less lucrative mainland China market [2].

bbs.pndchina.com, an active Chinese chat forum for P&D

Mostly we have just had app store rankings to rely on, which shot up significantly in the past month due to a collaboration with Supercell. ↩
There are lots of fans in China too, even though the game is not officially there yet (not to my knowledge, anyhow). It is available on various app stores in the country, such as Wandoujia. ↩

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Japan’s Mediba scoops up ad tech startup for $10M

Takeshi Hirano 2013.08.05

See the original story in Japanese. Japan’s Nikkei reported earlier today that mobile ad company Mediba has taken over ScaleOut, a Tokyo-based ad tech startup. The purchase price is reportedly 1 billion yen, or approximately $10 million. Mediba is an ad-focused subsidiary of Japan’s second largest telco KDDI. Some of our readers may recall that the company acquired ad-network Nobot back in August of 2011. ScaleOut runs a demand-side platform (DSP) which allows digital ad buyers to do more through a single interface. For instance, when you place an ad the platform typically helps you determine which network yields the best cost performance. In this space, we’ve seen more than 20 companies already enter the market, including Japanese internet giants CyberAgent and GMO, as well as FreakOut which raised more than $5 million back in March from Yahoo Japan. To learn more about the acquisitions that have happened in Japan in recent years, you can find out more on our acquisitions timeline. We’re also preparing bring you a special interview with the startup’s CEO Daisuke Yamazaki, so please stay tuned for that as well.

See the original story in Japanese.

Japan’s Nikkei reported earlier today that mobile ad company Mediba has taken over ScaleOut, a Tokyo-based ad tech startup. The purchase price is reportedly 1 billion yen, or approximately $10 million. Mediba is an ad-focused subsidiary of Japan’s second largest telco KDDI. Some of our readers may recall that the company acquired ad-network Nobot back in August of 2011.

ScaleOut runs a demand-side platform (DSP) which allows digital ad buyers to do more through a single interface. For instance, when you place an ad the platform typically helps you determine which network yields the best cost performance.

In this space, we’ve seen more than 20 companies already enter the market, including Japanese internet giants CyberAgent and GMO, as well as FreakOut which raised more than $5 million back in March from Yahoo Japan.

To learn more about the acquisitions that have happened in Japan in recent years, you can find out more on our acquisitions timeline.

We’re also preparing bring you a special interview with the startup’s CEO Daisuke Yamazaki, so please stay tuned for that as well.

How ScaleOut plans to evolve Japan’s ad-tech market [Interview]

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