Key Segment Information

Market Size Forecast of Main Internet Businesses^*2

Yahoo Japan is the segment's core company. Yahoo! JAPAN, the portal it operates, has built an overwhelming No.1 position in Japan^*1, well ahead of the rest of the field in areas including number of unique users, monthly page views per user, and usage time. In addition to its brand strength, this leading position reflects differentiation based on added value in e-commerce related areas like auctions, and a wide range of services for corporations and individuals.

Based on the drawing strength of the portal, Yahoo Japan's main earnings sources are “advertising revenue” and “pay content services revenue,” and compared to fiscal 2004, the segment's net sales have grown by a factor of 4 and operating income by a factor of 3.8 in fiscal 2009.

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Fundamental Strategy

The size of Japan's Internet advertising market has shown rapid growth in 2008, expanding 1.9 times^*3compared to 2006, but significant growth potential remains. For example the size of the newspaper advertising market is 828 billion yen^*3, representing approximately 50 million readers who read for an average of 25 minutes per day^*4. Relative to this, with more than 85 million users spending an average 55 minutes per day^*4 on the Internet, the Internet advertising market is small at 698 billion yen (out of which 537 billion yen are advertising production costs)^*3. High growth also continues in e-commerce like Internet auctions and online content like videos and music, games and books, with the spread of broadband and development of the mobile Internet.

While benefiting from the developments outlined above, Yahoo Japan, is pursuing “Social media services,” “Yahoo! Everywhere,” “Local information services for all lifestyles” and “Toward a more open network” as growth strategies to maintain growth that outpaces the market.

• Yahoo! JAPAN (Yahoo Japan Corporation) (Japanese only)

Social Media Services

Enable users to not only obtain but also generate tail content. By integrating the provision of head content and tail content Yahoo Japan is continuously adding more value to its portal. Yahoo! News incorporates a social media functionality that enables users to generate and post comments relating to news stories hereby promoting the integration of head and tail content.

Yahoo! Everywhere

The Internet's average usage time (excluding e-mail) of 55 minutes is less than 4% of a 24-hour day, but with the growth of devices that can access the Internet, including mobile phones, TVs, and game consoles, this number is expected to increase further. Yahoo Japan is ahead of the curve in this regard, working in a variety of ways to encourage users to access its differentiated services via devices other than PCs. Taking mobile phones as an example, Yahoo Japan offers portals like Yahoo! Keitai for SoftBank mobile phones and the mobile version of Yahoo! JAPAN, which are easy to use on a small display, and also provides popular PC content like Yahoo! Auctions to mobile phones.

Recent initiatives in areas other than mobile phones include the launch of the Yahoo! JAPAN for AQUOS Internet service for Sharp's full high-definition TVs, and in the car navigation sector, providing information like Yahoo! Drive for automobile manufacturers' car navigation systems.

Local Information Services for all Lifestyles

In order to provide local and lifestyle information that is more closely tied to the user's lifestyle, Yahoo Japan is striving to enhance map-based regional information services. Yahoo! Gourmet's online discount coupons are an example of the expansion of lifestyle information.

Towards a More Open Network

Yahoo! JAPAN has an overwhelming No.1 position as an Internet portal, but nevertheless its share in number of total monthly hours of usage is roughly 20%^*5. One of the new growth strategies launched in fiscal 2008 was to build win-win relationships with partners while at the same time expanding business opportunities by offering the advertising distribution technology, built up over many years at Yahoo Japan, such as the online fee-collection system Yahoo! Wallet etc. Fiscal 2009 saw search-linked advertising in particular begin to make a large contribution to growth at partner sites.