Japanese Mobile Spending Surges
By Carlo Longino, Tue Jun 29 18:15:00 GMT 2004

People spent nearly 400 billion yen over their mobile phones in the country last year, up a third from 2002. Spending on physical goods looks to have increased 70 percent.

In fiscal year 2003 (April 2003 through March 2004), the paid-content market for mobile phones was 394.1 billion yen, or about $3.7 billion. Divide by the country's population, and that's nearly $30 a head. Figure a 70% mobile penetration rate, and the figure climbs to $41 per subscriber.

Nikkei reports that 223.2 billion, or 56 percent of the total, was spent on "digital contents", assumed to be ringtones, games and the like. Ringtones were more than half of this, and the Mobile Contents Forum, the trade group which issued the study, says it was an 11% increase, with the segment "likely to enter a period of stable growth".

But the MCF says spending in the "electronic commerce market, which handles real commercial products", jumped 70% to 170.9 billion yen. It's confusing that they break out the two segments as making up the "paid contents market", but it would appear that people are buying nearly as many actual physical goods on their phones as they are ringtones and Java games.

It's not that huge a surprise, given Japan's penchant for vending machines, which for several years have featured technology letting users pay for things with their phones. But it also illustrates the value of the mobile as a micropayment tool if it's easy to use, like DoCoMo's recently launched FeliCa handsets.

Just as debit and credit cards have reduced people's dependence on cash thanks to increases in their ease and speed of use, mobile phones could have a similar impact -- but only if the payment systems can make transactions simpler and faster than current payment methods.