Masayoshi Son’s Next

I first heard about Japn’s Masayoshi Son when he made the Yahoo investment in 1995. After that, he made many bets – some worked, and others didn’t. He is now focusing on braodband in Japan.

Wired writes about the Japanese entrepreneur who “lost $75 billion in the dotcom crash. His new master plan: superfast, supercheap DSL for the masses.”

Softbank has spent close to $2 billion building out a gigabit Ethernet network and leasing copper wire from Japanese telecom giant Nippon Telegraph and Telephone. The result is a service, offered under the Yahoo! BB brand, that provides Internet access to Japanese homes at 12 megabits per second – eight times faster than what Americans are used to – for about $21 a month. Every day, as many as 7,000 new subscribers fire up their plug-and-play DSL modems, making Yahoo! BB the world’s fastest-growing broadband service.

So things are looking rosy, right? Not quite. Softbank is spending $250 to acquire every new customer – $50 million per month. Outside Tokyo subway stations, rain or shine, cute teens in white Yahoo! BB mackintosh coats hand out a free modem to anyone who breaks stride. A second-rate baseball team, the Orix Blue Wave, now plays in Yahoo! BB Stadium. Such marketing gambits increase the company’s profile but only add to Softbank’s staggering $3.9 billion debt.

Business Week too has a story on him, and his plans to now focus on online-gaming as the killer app for the broadband network that he is building in Japan.

On July 25 he plans to open a Web portal called BB Games featuring about 50 titles. Players will pay a monthly fee of $8.50 to $13 per title to square off against others across the country. By yearend 2004, Softbank plans to offer as many as 300 games and hopes the site to bring in revenues of at least $400 million per year by 2006. Of that, BB Games will keep 20%, with the remainder going to game developers. “There’s no doubt that the killer application for broadband is online games,” says Taizo Son, Son’s younger brother and a partner in the venture.

Son is hoping to turbocharge revenues by getting his broadband subscribers hooked on services such as games that bring in extra cash. Already, Yahoo BB has attracted 2.5 million users to an Internet phone service, and it’s now experimenting with pay-TV over its network. Down the line, Son plans to expand into e-learning and corporate services such as videoconferencing. Japan’s broadband content market could be worth $6.4 billion by 2005, a sharp jump from $1.5 billion last year, according to Mitsubishi Research Institute Inc.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.