Interview with Ochiai Masami, Chairman, Index Corp.

(From Journal of Japanese Trade & Industry (JJTI))

Byline: Interviewer: Kitamoto Ichiro

Index Corporation is Japan's largest provider of mobile phone content such as ring tone melodies and e-commerce sites. Looking ahead in this age of broadcasting telecommunications integration, the company has successively taken strategic measures aimed at the "marriage" of broadcasts and mobile phones. Specifically, it has formed a capital alliance with four key commercial TV networks to bolster its links with most of Japan's major commercial broadcasters. In a surprise move, it has also announced a plan to become the largest stockholder in the holding company of two big toy manufacturers - Takara and Tomy - with the aim of ensuring the inclusion of a variety of characters in its content business. The founder and chairman of Index, Ochiai Masami, speaks about the company's strategy.

TV Networks' Invest in Index to Enhance Ties Index has allotted \20.5 billion in new shares to four commercial broadcasters - Fuji Television Network, Tokyo Broadcasting System (TBS), Nippon Television Network (NTV) and TV Asahi -, CS broadcaster SKY Perfect Communications and two publishing companies. What is the main purpose of the capital increase? Ochiai: We made the decision mainly because terrestrial digital broadcasting for mobile phones is to start next spring. The memory capacity of mobile phone handsets will expand immensely with the introduction of models with hard disks. Such a development will put TV networks' sites in an extremely strong position among websites for mobile phones. The latest capital increase stems from our efforts to get ready for the advent of a giant memory-capacity age. We sought investment from major broadcasters across the board with the primary aim of bolstering cooperative links with them. From now on, we will undertake a variety of joint projects. It was the perfect timing because broadcasters are increasingly intent on forming alliances with IT businesses, which are rich in technologies for using mobile phone content. The latest move has also been prompted by Internet portal site operator livedoor's attempt to take over radio network Nippon Broadcasting System (NBS), citing the "convergence of broadcasts and telecommunications" as its main purpose. Its initiative has made TV stations more proactive about the integration of broadcasting, the Internet and mobile phones.

Index is to hold shares in Fuji TV and TBS as well. What are the circumstances behind the cross-shareholdings? Ochiai: This has been triggered largely by the takeover battle between Fuji TV and livedoor for NBS. Livedoor at one stage eyed taking over Fuji TV beyond its initial intent to acquire NBS, making Fuji strongly nervous. As part of the efforts to fend off the takeover bid, Fuji proposed a cross-shareholding with our company. A similar offer came from TBS as well, which tends to be the target of takeover bids because of its limited number of "stable" stakeholders. Originally, Index formed capital alliances with Fuji and TV Asahi in 2000 before we went public. We thought it would be difficult to enter into capital alliances with their rival broadcasters - TBS and NTV, but livedoor's takeover bid raised strong concerns among broadcasters as a whole, making it easier for us to strike capital linkup deals with all four key TV networks.

Tie-ups with Terrestrial Digital Broadcasting Specifically speaking, what kinds of new services are you going to offer? Ochiai: We are thinking of links between terrestrial digital broadcasting and mobile phone sites. We will work out the specifics with each broadcaster. For instance, although I cannot reveal details, Mercuro, a joint venture we set up with Fuji TV in April is trying to develop services that will allow viewers to interactively participate in TV programs via their mobile phones. Index has acquired the right to distribute video images of the 2006 Soccer World Cup games through mobile phones in Japan, which almost timed to coincide with the launch of terrestrial digital broadcasting for mobile phones. We are holding talks with TV broadcasters ...