• DoCoMo Inc. and KDDI Corp will operate the country's next-generation mobile broadcasting service. A Japanese government advisory panel favors the DoCoMo-led team to run the new service. By choosing DoCoMo, the government is backing a home-grown technology developed by the country's largest mobile carrier and local TV broadcasters -- a move that could isolate Japan instead of adopting another platform developed by U.S. chipmaker Qualcomm. The DoCoMo-led team will run the new platform for delivering TV shows and other multimedia content to cellphones and other portable devices. The mobile phone carrier will divide the consortium selected as sole provider of the service into two entities. One entity will build and manage the broadcasting facilities. This company will lease the facilities to the other entity, which will be converted into a broadcaster. The broadcasting company is expected to invite TV broadcasters, as well as businesses in film, publishing and other industries, to provide content for the service. It will be an uphill battle for DoCoMo to realize its goal of making the service profitable in three years. The break-even point is estimated at around three million subscribers. But Flo TV, a similar service already in operation in the U.S., is said to have signed up fewer than one million.
• NTT Docomo’s number of mobile money users top 15 million. The operator had 15.09 million users of the iD platform, which is the company's branded platform for postpaid electronic money and compatible credit cards on Docomo handsets that was launched in December 2005. The number of subscribers using handsets equipped with contactless IC chips compatible with iD has surpassed 37.5 million, representing over 60 percent of all Docomo subscribers. The operator, which is offering a credit payment service known as DCMX, and 67 credit card companies are currently offering credit payment services via iD. A number of companies provide iD-enabled plastic credit cards in addition to Osaifu-Keitai handsets.
• KDDI Corp said that senior vice president Takashi Tanaka would replace Tadashi Onodera as its president in December. Onodera, who has been KDDI's president since June 2001, will stay on as chairman. KDDI has been struggling to gain new subscribers in Japan's mature mobile market due partly to its slow entry into the growing smartphone segment.
• Japanese mobile operators added 524,600 new mobile customers in August to bring their total to 114.80 million mobile subscribers, figures from the Telecommunications Carrier Association (TCA) show. Softbank again led in subscriber additions during the month as it added 288,900 new customers to reach a total of 23.14 million. NTT Docomo gained 125,500 new subscribers to bring its total to 56.79 million, while KDDI ended the month with 32.20 million subscribers after adding 56,600 new customers. Emobile attracted 53,500 new customers to end August with a total of 2.67 million customers. Troubled PHS provider Willcom shed 18,700 customers, which brings the company's total to 3.82 million. Willcom has filed for bankruptcy and has begun a rehabilitation process.
• The Japanese government will launch an auction system when awarding spectrum, reports the Nikkei. The launch is to promote enhanced mobile phone networks and the creation of new services. Senior officials from the Cabinet Office and Communications Ministry decided to add the proposal to a list of regulatory reform measures under consideration by the government. The cabinet is expected to approve an economic stimulus package including these measures. The ministry hopes to decide on the specifics for these proposals by year-end and to have relevant legislation revised by the Diet next year.
• Domestic shipments of mobile phone handsets surged 3 percent on the year to 2.7 million units in July. Although overall shipments climbed for the first time in two months, the number itself remains at a low level. Domestic cellular phone handset sales have been weak since phone carriers changed their sales tactics between 2007 and 2008. A breakdown of the results shows shipments of cell phones increased 3.4 percent to 2.6 million units, but those of personal handyphone system (PHS) handsets declined 6.8 percent to 103,000 units. The figures do not include products from foreign manufacturers, such as Apple Inc.'s iPhone. Phone service providers previously subsidized the cost of handsets while locking customers into long-term contracts and recouping the subsidies through service charges.
Media, Entertainment and Gaming
• NTT DoCoMo and Dai Nippon Printing will partner in an electronic publishing business that covers content aggregation, distribution and retail sales of e-books. The business will use an open platform that combines DoCoMo’s existing content-distribution and payment systems with DNP’s planned hybrid digital/physical bookstores. DoCoMo also reached an agreement with NextWave Wireless to acquire the remaining 65 percent equity interest in PacketVideo for US$111.6 million. DoCoMo now wholly owns the subsidiary.
• Six Japanese internet companies have established a joint venture, Japan Network Enabler (JPNE), to promote their joint IPv6 internet business. KDDI, Japan Internet Exchange, NEC Biglobe, Nifty, Asahi Net, and Vectant will improve a business to provide IPv6 internet roaming services using native connection service to the Next Generation Network provided by NTT East and NTT West. JPNE has been created as a successor of Broadband Access Exchange Planning, after the company changed its name to JPNE. Broadband Access Exchange Planning was established by KDDI and Japan Internet Exchange in February 2010 and the six companies subscribed for the company's allocation of new shares. From April 2011, NTT's NGN is scheduled to start services adopting IPv6, which has a vastly larger address space and new features. JPNE will provide support for IPv6 internet connections by internet service providers.
• South Korea will spend up to 1.7 trillion won (US$1.45 billion) in the next five years to help the country's chipmakers find a way into the fast-growing non-memory chip market. The move comes as the country's chipmakers, such as world leader Samsung Electronics and Hynix Semiconductors which together control over 50 percent of the global memory chip market, have only about 3 percent of the bigger and more lucrative market for non-memory chips. Under the plans, the country's share of the global market for non-memory chips will rise to 7.5 percent by 2015. The global market for non-memory chips came to US$185.8 billion in 2009 and is expected to continue growing at an average of 15 percent a year.
Media, Gaming and Entertainment
• The Ministry of Culture, Sports, and Tourism (MCST) and the Korea Creative Content Agency (kocca) cooperated with 12 small- and medium-sized game developer companies in relation to the use of the domestic services platform (DSP) game portal. The formal opening of the DSP game portal is slated to be the middle of September. The companies that enter into the DSP game portal will receive free-of-charge support for the server, diverse marketing support, and diverse promotional support. MCST's plan is to heighten the awareness level of the game industry and the users about the games of the concerned enterprises. MCST will provide PR services up to a satisfactory level for small- and medium-sized game development companies which have insufficient PR and marketing capabilities.
• Samsung Electronics Co. will invest 30 trillion won (US$25.58 billion) in 2011 to boost its existing businesses as well as venture into new operations. According to Choi Gee-sung, the current chip-market demand remains very good. Lower chip prices would be of minor challenge due to Samsung's cost-competitiveness is at a top level in the industry. Samsung might venture or cooperate in the biotechnology and healthcare businesses in order to surge its existing operations in those segments. The company is also making a fresh bet in the emerging tablet PC market. The new tablet is seen as a challenge to Apple Inc.'s mega-hit iPad. The current e-book readers are doomed to lose a battle with multifunctional and Web-connected tablet PC devices.
• New figures show that Google’s China business is starting to feel the impact of its dramatic departure from the market. Google’s share of search market revenue slid by more than a quarter in Q2 while it declined to third place in the emerging mobile search market. Market leader Baidu entrenched its dominance of Chinese language search in the quarter, taking 70.0 percent of the market for the first time, while Google’s share slipped from 31 percent to 24 percent. The firm also holds sway in mobile search, with a 34.3 percent share, followed by Easou with 16.9 percent and Google on 12.3 percent, declined nearly five percentage points. Google had been leaking customers and page views in the quarter because of the uncertainty over its situation. Google has cut ties with two of its 25 Chinese advertising sales agents, Suzhou-based Universal Internet Media and Weihua Network in Xi'an.
• Google is not among the 70-80 companies that have applied to provide Internet mapping services in China to the country's State Bureau of Surveying and Mapping, but the company will send a senior executive to China this week to discuss the licensing scheme with the bureau. Google may not be allowed to continue offering its online map service in China if it doesn't receive such a license. All companies providing online map and location services, searches or downloading in China are required to apply for approval to continue operating. Companies whose applications are denied won't be allowed to continue offering online map services in China.
• Vodafone has arranged to sell its 3.2 percent stake in China Mobile for 4.3 billion pounds (US$6.6 billion), prompting speculation that more asset sales are on the way. The U.K. operator will sell its 642.9 million shares to a group of banks including Goldman Sachs, Morgan Stanley and UBS. These banks will then on-sell the stake on to institutional investors. Vodafone will use 70 percent of the proceeds to acquire back shares, with the remainder used to reduce its 33.3 billion pounds (US$51.1 billion) net debt. CEO Vittorio Colao flagged up plans to divest minority holdings in July, saying the company will focus on its core markets in Europe, Africa and India. The sale of the China Mobile stake, which Vodafone acquired in 2000 and 2002 for around US$3.3 billion, is its biggest divestment.
• China's mobile handset and liquid crystal display-TV exports declined unexpectedly in June, according to iSuppli Corp., as the handsets were negatively impacted by a government investigation and the televisions took a hit due to weak demand and rising inventory. Exports of mobile handsets in June amounted to 59.5 million units, declined 1 percent from May. Meanwhile, total LCD-TV export shipments declined 3 percent, declining to 4.3 million units. Channel inventory in June surged sequentially because of weaker-than-expected sales. But LCD-TV inventories in the channel piled up after China's Labor Day on May 1, iSuppli's analysis indicates. Furthermore, LCD-TV original equipment manufacturers placed fewer orders to original design manufacturers in July because of less-than-optimistic news regarding demand in the U.S. and Europe.
• China Telecom has awarded a 1 billion yuan (US$146 million) passive optical network equipment contract to ZTE. ZTE will supply its ZXA10 xPON passive access system to support China Telecom’s City Optical Network project, which was launched in 2009. China Telecom will deploy 20 million lines of fiber optic equipment in order to provide 12Mbps broadband access to more than 70 percent of the rural areas and up to 100Mbps access speeds for major cities across the country. ZTE has been contracted by Telekom Malaysia as one of the major suppliers for Malaysia's nation-wide high-speed broadband network. ZTE will provide Telekom Malaysia with multi-service access nodes as part of the phase one of the HSBB network development.
• China's 3G service subscribers surged 28.08 million by the end of July, boosting 11.4 percent from the previous month and 544.6 percent from the same period of 2009. The country respectively generated 3G subscribers of 14.82 million and 2.87 million in the first seven months and July. The 3G service subscribers of China's three telecom operators, China Telecom, China Mobile and China Unicom, respectively topped 7.75 million, 11.83 million and 8.5 million by the end of July. The three carriers made investments of 22.4 billion yuan (US$3.3 billion) by the end of July. Among them, 12.8 billion yuan (US$1.9 billion) were from China Telecom, 7.8 billion yuan (US$1.1 billion) from China Mobile, and 1.8 billion yuan (US$266 million) from China Unicom, respectively representing 47.4 percent, 17.3 percent and 7.8 percent of their plans.
• China Unicom’s net profits in the first half of this year declined 62 percent from a year earlier because of subsidies for 3G mobile phone services and 3G network related depreciation costs. Since the Chinese government granted China Mobile, China Unicom, and China Telecom licenses for operating 3G telecom services in January 2009, market competition in China's telecom industry has become more intensive. The three carriers have competed in persuading subscribers to use higher-priced 3G services by offering more attractive mobile phone models, in an effort to lift the average revenue per user The telecom operator's operating revenue topped 82.11 billion yuan (US$12.1 billion) due to boosting mobile business revenue. China Unicom had sales and marketing cost of 11.34 billion yuan (US$1.7 billion) in the first half of the year. The carrier took out 1.17 billion yuan to subsidize subscribers buying 3G handsets.
Media, Entertainment and Gaming
· Mixed second quarter results this year from China's leading online game operators show a leveling off in the robust growth of the industry that has lasted for over a decade. Of China's six leading online games operators, Shanda and Giant had declining games revenue year-on-year by 4 percent and 13.1 percent respectively. Analysts have studied that these may be caused by the lack of innovative game releases coupled with stricter regulatory issues. However larger industry players Tencent and NetEase.com have continued to see revenue from the sector rise substantially year-on-year by 73.6 percent and 52.2 percent respectively. Perfect World and Changyou.com had more modest gains in games revenue of 12.2 percent and 17 percent respectively.
· Shanda Interactive Entertainment reported net income attributable to shareholders of 168.8 million yuan (US$24.9 million) in the second quarter of 2010. Total revenues for the quarter surged 4 percent quarter-on-quarter and 10 percent year-on-year to 1.36 billion yuan (US$200 million). Shanda Games contributed 1.12 billion yuan (US$ million), a decline of 4 percent quarter-on-quarter and 7 percent year-on-year. Shanda Online contributed 248.9 million yuan (US$36.7 million), declined 4 percent sequentially and 8 percent annually. The company's revenues, which came from Ku6.com and its literature businesses, surged 42 percent on a quarterly basis and 150 percent on an annual basis to total 268.6 million yuan (US$39.6 million).
· Shanda Games announced the establishment of a joint venture with China Network Television (CNTV), and acquisition of a top large-scale online game Dragon Nest. The company witnessed net operating revenue of US$163.9 million in the second quarter of this year, falling 4 percent over the same period of a year earlier and 3 percent over the previous quarter. Net profit in the quarter hit 304.3 million yuan (US$44.8 million). The listed company attributed to the falling performance to off-season of online games. Shanda Games also announced its strategic cooperation with China Network Television (CNTV). The two parties will set up a merger. Shanda Games Chairman Tan Qunzhao said that the move is an innovation for the expansion of the company's domestic operation platform. The cooperation will sharpen comprehensive competitiveness of the two parties. The newly formed company will specialize in games operation and games media and to build a media publishing platform for games, through a close combination of advantaged resources of CNTV and Shanda Games and CNTV games channel games.cntv.cn. The two parties have not disclosed how much they will invest in the joint venture and the holding they will hold in the joint venture.
· Shanda Games Ltd. invest US$95 million to acquire the South Korean developer of one of its most popular games "Dragon Nest” in order to fully capture revenue by "Dragon Nest," as well as strengthen its research and development (RD) capabilities. Shanda Games acquired the operating license to "Dragon Nest," a 3D massively multi-player online role-playing game (MMORPG), launching the game in China in July. Further more, Shanda games will also buy Eyedentity Games as part of the Company's overall growth strategy in the global market. The acquisition will combine Shanda Games' online game platform with Eyedentity's game development capabilities, to develop Shanda Games' leading global online game platform. The transaction aims to expand Shanda Games' international presence with the addition of Eyedentity's internationally licensed online game portfolio, strengthen Shanda Games' in-house online game development capabilities, allow Shanda Games to fully capture the benefits of the successful launch of "Dragon Nest" and reinforce Shanda Games' leading position in the online game industry.
· Focus Media Chairman and CEO Jason Jiang is offering 8.1 million American depository shares (NYSE:ADS) in the out-of-home advertiser through his wholly owned company JJ Media. The company had 145.57 million ADSs outstanding as of September 7. Focus Media will widen its share repurchase program to US$300 million from US$200 million and to extend the termination date of the repurchase plan to June 2011 from February 2011. Focus Media had spent a total of US$36.7 million in share repurchases.
· Ku6 Media has secured the Chinese online broadcasting rights for a number of European and American movies and TV programs in a copyright agreement with Time Warner subsidiary Warner Bros. International Branded Services. The company's copyright will still be high in the short term, and will take some time for it to break even. Ku6.com paid US$14.6 million on content acquisitions in the second quarter, contributing to a net loss of US$11.8 million. The site secured Hai Run Movies & TV Production and Huayi Brothers as its content partners in May and August this year, respectively.
• JA Solar Holdings Co. signed a 30 billion yuan (US$4.42 billion) credit agreement with China Development Bank (CDB) to finance the company's long-term growth plans. Collaboration opportunities with CDB include mutually beneficial arrangements for project financing and financial services. Sales of photovoltaic solar equipment have jumped this year as buyers rush to build projects ahead of declining subsidies in Europe. JA Solar would ramp up its cell manufacturing capacity to 1.8 gigawatts by the end of 2010 to meet the growing demand.
Disclosure: Author holds no positions in the stocks mentioned