Presentation at Social Networking Conference, May 8, 2008, Tokyo

1. Monetizing Mobile Social Networks
Christopher Billich, Infinita Inc.
Social Networking Conference
Tokyo, May 8, 2008

2. Japan Mobile Market
Key Differences
Same cost
for On- and “Free” 80% 3G
★ User Experience Level Off-Deck Messaging penetration
access
Operators
Operators
control All handsets
★ Operator-Handset Maker handset SIM-locked
pay handset
Relationship Level makers
makers
Operator
★ Operator Business Model Email, not Revenue (Open)
Level SMS Share favors Standards
CPs
★ Regulatory/Government Competition on Network Technologies
Level
No spectrum license costs
© 2008 Infinita Inc.

3. Mobile Social Networking
Awareness and Adoption among Mobile Users (in %)
No Awareness
Awareness, but no Adoption
Adoption
Source: Impress R&D, September 2006/2007
© 2008 Infinita Inc.

4. Mobile Social Networking
mixi
★ Operated by mixi Inc.
★ On-deck on 2 of 3 carriers
★ Mobile and PC Social Networking Site
★ Business Model: Advertising (>90%),
Premium features (<10%)
★ #1 service in Japan SNS market
★ More than 13 million users
★ 15-20 billion PV/month
★ More than 60% of traffic generated via
mobile (up from under 20% 15 months
ago)
★ Key Points
★ Invitation-only
★ Clear mobile/PC differentiation
Source: mixi Inc.
© 2008 Infinita Inc.

5. Mobile Social Networking
mobagetown
★ Operated by DeNA Co., Ltd.
★ Off-portal site
★ Free, mobile-only site combining games +
social networking + avatars + mobile
commerce (and more)
★ Goal: #1 mobile portal in JP
★ Business Model: Advertising/mobile
commerce
★ More than 6m users in 18 months (now
more than 10 million)
★ ca. 18 billion page views/month
★ Core Enabler:Virtual currency
“MobaGold”
Source: DeNA Co., Ltd.
© 2008 Infinita Inc.

6. Mobile Social Networking
mobagetown
© 2008 Infinita Inc.

7. Mobile Social Networking
mobagetown: Business Model
Source: DeNA Co., Ltd.
© 2008 Infinita Inc.

8. Mobile Social Networking
mobagetown: Revenues, Registered Members, Page Views
Revenues in Reg. Members in 9.87 Page Views in 17,924
6,000 10 9.43 18,000
¥ million million million
9.03
5,162 9 8.65 16,000
8.13 14,927
5,000 7.79
4,628 8 7.43 14,000 13,383
6.89
7 6.44
4,000 12,000
6.03 10,793
6 5.46
3,135 10,000 9,239
5 4.84
3,000
2,507 8,000
4
2,000 6,000
1,562 3
2 4,000
1,000
1 2,000
0 0 0
FY06 Q4FY07 Q1FY07 Q2FY07 Q3FY07 Q4 Jun 07 Sep 07 Dec 07 Mar 08 Apr 07 Jun 07 Sep 07 Dec 07 Mar 08
Source: DeNA Co., Ltd.
© 2008 Infinita Inc.

9. Japan Advertising Market
Advertising Expenditures across Major Media 2007 and YoY Changes 2006/(2005)
+21.3% (+28.6%)
Mobile: only 1%
+3% (+0.9%) share, but
+59.2% (+35.4%)
growth
-5.2% (-3.8%)
-4% (-1.3%)
-4.2% (-1.9%)
+10.8% (+11.7%)
-0.9% (-1.2%)
Sources: Dentsu Communication Institute, February 2008; Production Costs + Media Spendings
© 2008 Infinita Inc.

10. Mobile Content vs. Mobile Advertising Revenues
2003-2007 (in US$ billion)
Mobile Advertising ★ Mobile Content revenues growing at
Mobile Content average annual rate of +17.3% and
slowing (last: +10%, est.)
★ Mobile Advertising increasing +56.5%
yearly and accelerating (last: +59%)
★ Advertising/Content Revenues Ratio
shifted from less than 1:20 to more than
1:6 within past 5 years
*
Mobile Content and Mobile Advertising Revenues in US$ billion
Source: Mobile Content Forum (July 2007), *Infinita Estimate (May 2008)
© 2008 Infinita Inc.

11. Mobile Advertising Market
Mobile Advertising Revenues, 2000-2011 (US$ million)
★ Mobile Advertising revenues to
almost double again within next 4
2007 actual figures exceeded years
Dentsu’s own previous estimate ★ Crossing the US$ 1 billion threshold
(US$ 556 million) by 12% by 2010
★ Mobile still undervalued as an
advertising medium by a factor of 4
(2006)
• Media Usage Share 4%
• Advertising Expenditures Share 1%
Sources: Dentsu Communication Institute (April 2007, estimates)
(February 2008, historical data)
© 2008 Infinita Inc.

12. Mobile Advertising on mobagetown and mixi Mobile
Examples: Banner Advertising
★ Compensation model: CPM, weekly
★ Pricing: US$ 3,000 to US$ 9,000
★ Av. CPM: US$ 3-6
★ Targeting: Operator, Gender
★ CTR (mixi): 0.2-0.4%
Sources: DeNA Co., Ltd., mixi Inc.
© 2008 Infinita Inc.

13. Mobile Advertising on mobagetown and mixi Mobile
Examples: Exit Screens
★ Compensation model: CPM, weekly
★ Pricing: US$ 4,500 to US$ 7,000
★ Av. CPM: US$ 4.5-7
★ Targeting: Operator, Gender
★ CTR (mixi): 0.7%
Sources: DeNA Co., Ltd., mixi Inc.
© 2008 Infinita Inc.

14. Mobile Advertising on mobagetown and mixi Mobile
Examples: Mobile Email Advertising (Newsletters)
★ Compensation model: CPM
★ Av. CPM: US$ 10 (Newsletter) to
120 (Standalone Messages)
★ Targeting: Operator; Gender, Age,
Region (at premium)
© 2008 Infinita Inc.

15. Mobile Advertising on mobagetown and mixi Mobile
mobagetown x Coca Cola Tie-up
★ Advertiser: Coca Cola
★ Campaign Date: 05/07-06/07
★ Campaign Outline
• DeNA created special Coca Cola-
branded version of mobagetown,
accessible only to double-registered users
of mobagetown and Coca Cola Mobile
• Reach top scores on Coca Cola-branded
games to receive branded avatar items
• Coca Cola-branded Decomail graphics to
use in mobile emails to friends, thus
spreading awareness for the campaign
• “Coke Character” with avatar and blog
Coca Cola/mobagetown Tie-up Site • Campaign extensively promoted via tie-in
Source: Nikkei
with Coca Cola “The Coke Side of Life”
TV campaign
© 2008 Infinita Inc.

16. Mobile Advertising on mobagetown and mixi Mobile
mobagetown x Coca Cola Tie-up
★ Results (first four weeks of campaign)
• Almost 1 million sign-ups for Coca Coca
mobile site
• 185 million page views
• 5.6 million page views on Coke character
blog page alone
• 350,000 users connected with Coca Cola
character as friends
• 190,000 comments posted to the Coke
character blog
★ ...and the campaign lives on one year later
Coca Cola-branded version
of mobagetown (above),
branded games (top right),
branded Decomail (left)
Source: DeNA Co., Ltd.
© 2008 Infinita Inc.

17. Mobile Advertising on mobagetown and mixi Mobile
mobagetown x UNIQLO Tie-up
★ Advertiser: UNIQLO
★ Campaign Date: April 2008
★ Campaign Outline
• Download coupons for apparel retailer
UNIQLO and redeem for discounts on
relevant items at participating UNIQLO
stores
• Exclusive avatar items corresponding to
the goods purchased via entering the
unique product ID from price tag on
mobagetown
• Branded game, goal: “try on” the outfits
that are being promoted as part of the
campaign by jumping up to catch clothes
flying out of a clothes dryer
UNIQLO-outfitted Avatars and Branded Game
Source: DeNA Co., Ltd.
© 2008 Infinita Inc.

18. Mobile Advertising on mobagetown and mixi Mobile
mixi x CC Lemon Tie-up
★ Advertiser: CC Lemon (Softdrink)
★ Campaign Date: May 2008
★ Campaign Outline
• CC Lemon “Corner” set up on mixi
Mobile
• Branded games (Flash Lite)
• Branded profile backgrounds (“mixi
Collection”)
• “Keitai Soap Opera” (mobile novel)
published in daily installments
Source: mixi Inc.
© 2008 Infinita Inc.

19. Mobile Advertising on mobagetown and mixi Mobile
mixi: “Login Jacks” and Promotions
★ Login Jacks: Fully branded
versions of mixi Mobile login
Page linked to promotions
within the site (sweepstakes
etc.)
★ Promotional campaigns that
feature limited-edition products
and branded content
mixi Login Screen Jacks (left) and LAWSON promotion (right)
Source: mixi Inc.
© 2008 Infinita Inc.

20. mobagetown
Revenues Breakdown by Segment
Banner/Email Advertising Revenues from <18 yrs segment
Pay-per-performance Advertising
Avatar Item/Virtual Currency Sales
21% 100%
30% 70%
32%
47% 16% 84%
Source: DeNA Co., Ltd. FY2007 Q4
© 2008 Infinita Inc.

21. Avatar Items/Virtual Currency Sales
mobacasino
★ Launched in early April 2008
★ Virtual casino featuring multi-player
Roulette, Black Jack and Poker
★ To play, users need “Casino Coins” which
can be obtained in exchange for Moba Gold
★ User rank rises with play frequency, enables
access to higher, more exclusive floors of
the casino
★ Goals
• Deliver gaming content more appealing
to adult audience
• Create additional “outlet” for MobaGold
currency beyond avatar items
Source: DeNA Co., Ltd.
© 2008 Infinita Inc.

22. Avatar Items/Virtual Currency Sales
mobacasino
“Insert
MobaGold”
Source: DeNA Co., Ltd.
© 2008 Infinita Inc.

23. Avatar Items/Virtual Currency Sales
Freemium Games
★ From late April 2008, DeNA will
release exclusive mobile games
developed in cooperation with top-
tier games publishers
★ Adopted from well-known role-
playing and simulation titles from
other platforms
★ Basic play is free - MobaGold
necessary to unlock multi-player
mode, buy in-game weapons and tools
★ Proceeds from sales shared with
publishers (rather than licensing)
★ Goals
• Deepen games portfolio
• Create additional “outlet” for
MobaGold currency beyond
Source: DeNA Co., Ltd. avatar items
© 2008 Infinita Inc.

24. Mobile Advergaming
Dentsu/Robot “TsuiTsui”
Source: Dentsu
© 2008 Infinita Inc.

25. mobagetown
Evolution from Social Networking/Games Site to Mobile Portal...
Source: DeNA
© 2008 Infinita Inc.

26. mobagetown
...and Mobile Search Engine
“For search, too:
mobagetown.”
“A new
experience in
mobile search.”
© 2008 Infinita Inc.

27. Mobile Search/Content-Matched Advertising
Search-related vs. Non-search-related Mobile Advertising Revenues, 2007-2011 (US$ million)
Search ★ Mobile search-related revenues
Non-search accounted for 16% of mobile
advertising last year...
★ ...and will increase 5-fold to reach
more than 60% of all mobile
advertising revenues by 2011
Source: Dentsu Communication Institute (April 2007)
*Note: graph based on 2007 estimate (US$ 556 million),
actual Search-/Non-search data for 2007 (US$ 621 million) not released yet
© 2008 Infinita Inc.

28. Mobile Search/Content-Matched Advertising
...on mobagetown and mixi Mobile
★ Format: Text ads
★ Compensation model: CPC
★ Pricing: bidding mechanism (price set by
advertiser)
★ mobagetown
• Search: proprietary solution
• Content-matched ads: Overture
★ mixi Mobile
• Search: Google
• Content-matched ads: Overture
Overture-delivered content-matched ads on mixi Mobile communities
Top of page (left), bottom of page with Text Ad (right)
© 2008 Infinita Inc.

29. Mobile Search/Content-Matched Advertising
Local Search Advertising on mobagetown
★ Formats: Text ads relevant to search area
★ Compensation model: CPC
★ Pricing: bidding mechanism
★ Location-based advertising network
“AdLocal” service provided by Cirius
Technologies, Inc.
★ Advertisers can specify proximity (during
an address- or map-based search)
★ Targeting: genre/product category, time
of day, day of the week, area radius (1 to
10 km), weather (e.g. “show my
advertising only if it is raining”)
Source: Cirius Technologies
© 2008 Infinita Inc.

30. Key Points
★ Mobile Social Networking
• Still lots of room for growth, but latecomers facing strong lock-in effects
• MoSNS rapidly becoming a feature, not a service
• Users gravitating towards using MoSNS as search resource
★ Mobile Advertising
• Baby steps along a rocky road - but great potential
• Moving towards deep tie-ups and branded content
• Shifting from CPM to Pay-for-performance
• Search and Content-Matched Advertising gaining significance
★ Revenue Streams beyond Mobile Advertising
• “Freemium” content and services outside core SNS functionalities
© 2008 Infinita Inc.

31. Infinita
Scope of Services
Non-domestic Clients
★ Mobile and PC sites/apps ★ Outbound market intelligence
production and consulting
(foreign clients for
JP market)
Technical Research and
Development Consulting
★ Inbound market intelligence
★ Mobile and PC sites/apps and consulting
productions ★ Domestic market intelligence
(domestic JP market) and consulting
Domestic Clients
© 2008 Infinita Inc.

32. Infinita
Selected Clients
© 2008 Infinita Inc.

33. Thank you!
www.infinita.co.jp/research
billich@infinita.co.jp
© 2008 Infinita Inc.