Japan’s E-Reader Industry Struggles to Keep Up as Amazon Takes the Lead; Even though Rakuten’s Kobo had beaten Kindle to market by nearly five months, it grabbed only 33 percent of Japan’s e-reader sales

September 1, 2013

Japan’s E-Reader Industry Struggles to Keep Up as Amazon Takes the Lead

By JOSHUA HUNT

Tokyo shoppers consider e-reader options: Rakuten’s Kobo and Amazon’s Kindle.

TOKYO — When Rakuten, Japan’s leading e-commerce company, introduced its Kobo e-reader in Japan in July 2012, the company’s chief executive, Hiroshi Mikitani, presented a gift to Yoshinobu Noma, the president of Kodansha, Japan’s largest publisher. It was a T-shirt emblazoned with “Beat Amazon.” Mr. Mikitani wanted to signal that the two companies had no intention of slugging it out in a print-versus-digital fight in Japan. The alliance did little to help them defend against Amazon. Four months later, Amazon brought its Kindle e-reader to Japan. It quickly became Japan’s top-selling e-reader, gaining 38.3 percent of the market, according to the MM Research Institute, a data firm in Tokyo. Even though Rakuten’s Kobo had beaten Kindle to market by nearly five months, it grabbed only 33 percent of Japan’s e-reader sales during the same 12-month period. Sony, which had stated its goal of selling half of all e-readers by 2012, managed to hold only 25.5 percent with its devices.Amazon sells its Kindle in 14 countries, Japan being the very latest. Misao Konishi, an Amazon spokeswoman, declined to talk about the company’s goals for the Japanese market, but she did offer some insight into Amazon’s ambitions. “Every book ever printed, in every language, available to buy in 60 seconds,” Ms. Konishi said. “There are many things to accomplish in order to achieve that vision in Japan.”

The Kindle’s quick success is a stark contrast to the Japanese companies’ efforts. Until Amazon showed up, e-readers failed to live up to expectations. Sony brought out the first reader using E Ink technology in Japan in 2004, the LIBRIe.

Buyers of the LIBRIe, which like early Kindles showed black text on a white background, suffered from a convoluted marketplace that allowed them only to rent e-books, not buy them. Amazon, which developed its Kindle with digital books people could buy from — where else? — Amazon.com, found instant success after its introduction in the United States in 2007.

Sony stopped selling its device that year. The company’s subsequent e-readers, even after Sony developed a library of books to buy, have met with limited success.

Japan isn’t a big contributor to global e-reader sales, estimated at around 19.9 million units by IDC, a market research firm. MM Research said that a total of 470,000 devices were sold there last year, and that it expected sales to climb about 10 percent to 520,000 units in 2014.

Amazon’s victory over Sony and Rakuten, which got into the e-reader business when it bought the Toronto-based Kobo in November 2011, began with aggressive pricing. Amazon sold the Kindle Paperwhite for 7,980 yen, or about $80. Not only was its price about $40 less than it was in the United States, it also matched that of Rakuten’s Kobo and Sony’s PRS-T2.

In a bid to gain market share, Rakuten dropped the price of its e-reader in July to to 5,480 yen, and will continue to focus on this basic model, even as the company launches the new high-end Kobo Aura HD in Europe and the United States in September.

But Amazon wasn’t winning just because of price. It also gave consumers another reason to prefer the Kindle. “The reason for the Kindle’s success in Japan is the same as it was in America,” said Munechika Nishida, author of “The Truth About the E-book Revolution” and a technology analyst. “The Amazon Web store is the easiest to use, the easiest to understand.”

Sony and Rakuten’s e-readers are not technologically inferior to the Kindle, Mr. Nishida said, but buying e-books on the Kindle marketplace takes fewer steps. Rakuten and Sony’s devices make browsing and purchasing more difficult, he said.

The Japan Kindle store, which opened last October, offers more than 140,000 Japanese-language titles. It added 7,000 more titles in just the last 30 days. Kodansha now has 10,617 e-book titles available on the Kindle marketplace.

The Kobo store advertises more than 130,000 e-books, but its limited search capabilities make browsing that inventory difficult. The Sony marketplace offers more than 108,000 Japanese-language titles.

Before the Kindle’s arrival, both Kobo and Sony’s marketplaces each offered fewer than 80,000 e-book titles. Without a popular marketplace, Rakuten and Sony failed to convince the top two Japanese publishers, Kodansha and Shogakukan, of the profit-generating potential in e-books. Digitalization of their titles proceeded slowly.

Amazon, however, had experience in the United States selling e-books and brought that experience to Japan. That made all the difference for fence-sitting publishers experiencing dwindling profits.

Sales of books and magazines in Japan declined 3.6 percent in 2012, according to the Research Institute for Publications, the eighth consecutive year of declining sales. E-book and e-magazine sales, however, increased by an estimated 18 percent, and the growth potential for e-publishing in Japan is expected to increase following proposed copyright law reforms announced last month by the Agency for Cultural Affairs. The changes, aimed at combating piracy and developing the e-book industry in Japan, are on the agenda for next year’s Parliament session.

Nao Takada, a 26-year-old employee of the Japan Automobile Federation, was visiting a Tokyo bookstore, but she, like readers in other parts of the world, may be buying less there. She said she bought the Kindle Paperwhite because it was small and easy to carry, and added that she liked the ease with which she could browse purchases.

“I still go to regular bookstores,” Ms. Takada said, “but a lot of times I just browse, find something to buy, then go home and download it on Amazon.”

In Tokyo’s Jimbocho neighborhood, famous for more than 100 years for its used and specialty bookshops, Hiroshi Kobayashi of Komiyama Books said customers sometimes used their smartphones to snap photos of books they planned to download later. Still, he said that he didn’t consider the Kindle a threat to his livelihood — yet.

“Eventually, they’ll begin making electronic versions of these older, rare books,” Mr. Kobayashi said. “Then I’ll have something to worry about.”