Can Goliath MySpace defeat David Mixi?

As MySpace seeks to penetrate Japan's market by teaming up with Softbank, Mixi is confident it won't be affected much by this move. According to Financial Times' article (Dec.6, 2006), Mixi starts targeting Japan's baby boomers to expand its user base, whose 80% is now constituted of subscribers aged between 20 and 34. The invitation only social networking site Mixi is a dominant player in Japan recruiting under its banner more than 6.5 million users who have created 900,000 online communities. It ranks only second after Yahoo in popularity in Japan.

The confidence of Mixi management is based on the fact that "about 6.8m Japanese will celebrate their 60th birthdays over the next three years." Based on market researches and survey data, Mixi thinks newly retired people will become active members of its network by uploading travel pictures and writing "blog-style" diaries and participating or organizing online communities that can range from "sky watching" to "love of sleep" interests.

Besides being "demographically removed from the average user of MySpace", Mixi has other unique features that make it very attractive to Japanese users. First of all, it is mobile-friendly, with 2bn hits coming from cell phones and only 750m from PC users. For comparison, about 1.4 million mobile customers logged onto MySpace using the wireless Web in September 2006, according to Telephia. Obviously, to succeed, MySpace needs to address the mobile internet and has a fully-functional mobile version available to members of all Japanese mobile operators. Instead, MySpace announced the launch of localized PC version in March 2007, while it is not clear whether the mobile version will also be operational at that time. Additionally, the partnership with Softbank assumes the exclusivity of the offering to Softbank's mobile users, while Mixi is open to all cellphone users with Internet access. Among other lacking features of MySpace is the invitation only nature of Mixi that appeals to Japanese users who cherish the sense of privacy and exclusivity. It is yet to be seen but there is a big chance that MySpace will repeat the negative experience of eBay and other many global brands of entering Japan market if it won't learn about the local market.