Surveys Show Japanese Internet Growth Slowing

Several recent surveys reveal that, while the
Japanese Internet continues to expand at a significant pace, the rate of
growth is slowing.

In terms of infrastructure, the Japan
Network Information Center
(the
association responsible Japanese domain name and IP address assignment)
listed 59,494 *.jp domains connected as of March 1, 1999. While this is an
84 percent increase from March 1998 (32,296), it was lower than the 136
percent and
224 percent expansion of 1997 and 1996, respectively.

A January 1999 Internet domain name survey by Network Wizards, meanwhile,
reported over 1.68 million *.jp online hosts. This marked an increase of 44
percent
from January 1998 (1.17 million), and enabled Japan to maintain its lead
over the UK and Germany in terms of connected hosts, but it was lower than
the 60 percent growth recorded in 1997 and the spectacular 350 percent
growth of 1996.

On the user side, too, growth is slowing.

The Japanese Internet user population was estimated at about 14 million at
the end of 1998, according to Access
Media International
(AMI). This
represented a 57 percent increase in the number of Japanese Internet users
during 1998, a drop from the 77 percent user growth rate of 1997.

“The number of Internet users in Japan will indeed continue to grow, but the pace of
that growth over the mid-term is likely to fall behind the US and other
countries,” said David Kellar, a Tokyo-based vice president of AMI.

Kellar says AMI projects that the Japanese Internet population will grow by
about 44 percent this year this year, which would give Japan 20 million
Internet
users by January 2000.

Some 12 percent of the Japanese population now has Internet access. The
ratio is much lower than estimated over 30 percent of the US population with
Internet access for two reasons.

The first factor restraining growth is Japan’s lower rate home PC
penetration. Fewer than 20 percent of Japanese households have a computer; the
comparable figure for the US is over 40 percent. Japanese offices likewise
lag US
offices in the numbers of computers and networks installed.

A second factor is Japan’s time-based phone fees. A DSA Analytics study of
“The Internet User and Online Commerce in Japan, 1999,” notes that most
Japanese users “think that the Internet is too expensive and too slow to
use once they get online.”

A daytime 15-minute online session through a local access provider, for
example, costs 50 yen (US$0.41) in phone charges.

Indeed, statistics indicate that the typical Japanese home user is accessing
the Internet more frequently, but for shorter periods each time; the total
amount of time spent online has not increased appreciably in the past couple
of years.

A three-month by Nikkei Market
Access
(NMA) found that more than 60 percent
of Web pages accessed by Japanese users are viewed for 20 seconds or less.

More and more, growth of the Japanese Internet is being fueled by female
users.

A Nov./Dec. 1998 survey by Nikkei
Multimedia
found that women account for
over 17 percent of Japanese Internet users, a rise of 5 percent points in
just one year ago. The survey also found that two-fifths of new Internet
users in Japan are women, and that ratio has been steadily rising.

There has also been a rise in the average age of the Japanese Internet
population.

The DSA Analytics study suggests that this may be a temporary phenomenon
caused by “the rapid advance of local area networks in Japanese
corporations that have Internet connections,” which has given older office
workers their first access to the Net.

A September 1998 survey of over 1,000 AsahiNet Internet users by Nomura Research Institute (NRI) confirms
the increase in older users. The NRI survey found that 17 percent of users
were age 50 and older, up from 12 percent in 1997 and just 7 percent in 1996.

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