Japan’s digital business ecosystem landscape
The following is a table of the major domestic software / digital companies in Japan, and their business ecosystems. Note: I put it together a couple months ago, so some of the info may be old.
As comps, I included the big three mobile carriers (which are also very diversified, competing with many of these businesses in many of these markets), and also included some notes (non-exhaustive!) on the main global software giants in those spaces.
Image below, click to zoom.
The takeaway
The initial takeaway appears to be that the Japanese economy seems to be on its way to replicating its post-war “zaibatsu” (huge conglomerates with highly diversified business portfolios – such as Mitsubishi, Mitsui, Sumitomo, Yasuda) structure into a new set of, let’s call them “digital zaibatsu.”
Whereas the glue holding the traditional zaibatsu together – their point of integration, or moat, if you will – is a network of business connections and economies of scale, the digital zaibatsu are building a moat around their customers.
Like the zaibatsu, they enter markets aiming to lock in first mover advantage, but the difference is that, once they’ve entered those markets, their competitive levers are rooted in internet assumptions. Customer Experience value, winner-take-all flywheel-type revenue mechanics, etc.
Time will tell if the winner-take-all dynamic will be powerful enough to lead to further consolidation, but Rakuten and Yahoo/LINE (Z Holdings) would be the top candidates to start pulling away from the pack. One could imagine Recruit continue to compete with the top 2, and GMO/GMM/Mercari/DeNA partnering amongst themselves to fill out their offerings and tie their ecosystems together to compete with the leaders.
Please comment as I may have missed details, and also I may occasionally update this chart (no promises!)