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MTV to Reenter Japanese Market in Sync With Local Style, Flair

Entertainment: In new partnership, the channel plans January launch, this time more focused on international reach.


TOKYO — After bidding sayonara to the Japanese market in 1998, MTV said this week it is returning with different partners under a different structure that will give it much greater control.

"We never exited anywhere else before, and we did here," said Gregory J. Ricca, executive vice president of MTV Networks, in an interview in Tokyo. "But now the business is stronger [and] we're managing our own destiny."

MTV will take over the production facilities, staff, 24-hour time slot and 2.8 million viewers of Vibe, a Japanese music video cable and satellite broadcaster. From that base, it plans to relaunch in January the music television channel in Japan.

The company said several things have changed since it first entered Japan in 1992. Young Japanese are now far more Western in their outlook and more attracted to international brands like MTV.

MTV, a unit of Viacom Inc., also is far more focused on international expansion than it was eight years ago. And because it is now an equity partner in the Japan operation, rather than merely licensing its brand, MTV will offer far more local programming than it did during its earlier six-year tenure ending in 1998.

"The music people listen to in this country is 75% Japanese music," Ricca said. "MTV Japan was 75% international. We weren't responding to what consumers wanted."

MTV also realized it needs to be in the world's second-largest advertising and music market if it hopes to be a truly global player.

Local media reports attributed MTV's earlier departure to differences over licensing fees. MTV denied it was over money, but declined to comment further.

MTV's partner in the deal is Palo Alto-based venture company H&Q Asia Pacific, a successor to Hambrecht & Quist. H&Q Asia Pacific, through a local subsidiary called @Japan Media, bought Vibe in February for an undisclosed sum. It then approached MTV about taking a stake and helping to run it. Both groups declined to say how much equity or capital each partner has in the operation.

One problem MTV will have to overcome is its relatively weak brand name in Japan. "They don't have that strong an image here," said Masashi Morita, a media analyst with Okasan Securities.

Analysts add, however, that MTV's timing could be fortuitous. Japan is working overtime to catch up with North America and Europe in information technology infrastructure with huge sums being spent to expand its cable TV, digital broadcasting and fiber-optic capacity. This should provide opportunities for content-providers such as MTV.

MTV's target audience is between ages 16 and 34. Analysts add that to the extent it can attract the so-called F-1 group in particular--female viewers between ages 20 and 34--its prospects are even brighter.

Young women in Japan often set trends that reverberate throughout all age groups, and media that can reach them command premium rates, particularly from advertisers of cellular telephones, cosmetics, travel packages and online companies.

Junko Asakura, a 27-year-old planner at an Internet-related company, is a fan of hip-hop music and Japanese pop but says the old MTV format was too oriented toward foreign music. She adds that she would welcome more local Japanese music.

But some analysts question whether MTV's new emphasis on Japanese content is wise. Sakura Institute of Research media analyst Tadashi Nishi said Japanese viewers associate MTV with Western music and could be disappointed to find it looks like just another local network. "Japanese viewers can get Japanese music from so many other sources," he said.

Two of MTV's major rivals in the Japanese market are the Space Shower TV network, the market leader with 3 million viewers, and Channel V International with 500,000. Space Shower, a unit of Japanese trading company Itochu Shoji, airs mostly Japanese music, whereas Channel V, part of News Corp., relies almost exclusively on a non-Japanese music format.

Naoki Yamazaki, Space Shower's planning director, said MTV's announced plans are of concern because both networks could essentially be offering about the same 70% Japanese-30% foreign music mix.

"MTV could be a most formidable competitor," Yamazaki said. "We'll have to watch carefully what they do."

Ann Tsang, a spokeswoman with Channel V, however, downplayed the MTV move. Channel V and MTV often find themselves competing head-to-head in various Asia markets, she said. Furthermore, Channel V's all-foreign music format in Japan appeals to a slightly older, more sophisticated audience than does MTV. That said, Channel V is not ruling out starting its own locally programmed service using Japanese DJs and local music if the market moves that way.

Japan has an enormously vibrant market with many hugely popular local artists almost unrecognizable beyond its shores. Glenna Patton, an MTV Networks International vice president, said given Japan's leadership in other areas of pop culture, the MTV link could lead to more cross-over between the Japanese and Western music markets. Ultimately, however, those decisions are made by programming officials in each local market, she added.

Most competitors said one of the toughest challenges in this business is to stay in sync with teen and twentysomething tastes, given how quickly tastes change. "We need to stay at the cutting edge, what kids are thinking when they're in line at McDonald's," said Shoji Doyama, president and chief operating officer at @Japan Media, MTV's partner. "We have to make sure we're constantly sensitive to the market."


Rie Sasaki in the Tokyo bureau contributed to this report.

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