But the launch of an e-reader and e-books in Japan, the world's second-biggest publishing market, is a pivotal move. Rakuten has reached a saturation point in Japan and needs to find new products to sell. The launch also tips the company further into the fast-moving world of digital content, a global space where Amazon, Apple Inc and Google Inc are fighting it out and where Japanese giants like Sony Corp have largely failed to make their mark.
Merely launching an e-book service in Japan is no mean feat. The past decade is littered with big-name initiatives that have languished or failed. They include devices from Panasonic, Toshiba and Sharp. Amazon on its Japanese website this month added a link for users to sign up for updates about Kindle's local availability, but declined to give details about when the device and service would be launched.
"In the last two months their attitude has completely changed," Mikitani said. "Before they were skeptical of worried about the negative impact for their business. Now they have changed their mind. This is their opportunity." This marriage was symbolized earlier this month when Mikitani appeared alongside Yoshinobu Noma, CEO of Japanese publishing giant Kodansha Ltd, on a panel at Tokyo's annual e-book fair.
He presented his fellow panelist with a t-shirt with the words "Destroy Amazon" in Japanese emblazoned on its camouflage pattern. Success of the Kobo e-reader is by no means guaranteed. The key, said Daisuke Kono, an editor at Tokyo's Internet Media Research Institute, is going to be just how many titles Rakuten can offer. Mikitani said his staff were busy digitizing content, but he is not sure how many would be available on the day of launch.
"Mickey-san really wants to make a big success of Kobo in Japan," says Robin Birtle, a publisher of ebooks in Japan. "In terms of the big heavyweight players, it's the only virgin market with any size to it." It's also an important step for Rakuten itself. More than 80 percent of Japan's 94 million Internet users already have an account on Rakuten's ecommerce site, the company says. That means that while Rakuten dominates online commerce, it needs to find growth, not in new users but in new things to sell to them.
So, Rakuten is essentially planting the seeds for its future revenue right now." But it's not just about Japan. Mikitani's success in persuading publishers to sign up was partly by promising them new markets. Japanese content, he says, has a global audience, whether it's Japanese manga, TV or magazines.
Most of the Japanese content available on Kobo will also be available overseas, Mikitani said. "If you go to China or Singapore the most popular fashion magazine is Japanese," says Mikitani. Publishers aren't profiting much from this opportunity, he added. "With this format, they can," he said. "This is a global opportunity for them." Rakuten's ability to deliver on this rests in part on its partnerships with carriers, device manufacturers and book stores.
Kobo's e-book store has been included as part of Samsung's Readers Hub preloaded on some of its Android-phones, although a Kobo spokesperson was not sure whether this agreement was still active. This approach, Mikitani says, extends beyond books to his Kobo Vox, a media tablet not unlike Amazon's Kindle Fire and Google's just launched Nexus 7.
Vox is also compliant with Google services, meaning that users can access content on Google's Play store as well as Kobo's own. Trying to take on the big players in every segment would not be possible, he said. "It's going to be competitive and that's why we're not trying to compete everywhere if it's smarter to have more cooperation and collaboration rather than trying to dominate everything. If you can integrate that's great, if not we are still competitive," he said.
"It's a national sport to collect as many Rakuten points as possible," says Serkan Toto, a Tokyo-based consultant, who calls it the company's "secret sauce." Mikitani declines to go into detail about how the points program would be integrated with Kobo. "It's not just about money but how to make it interesting," he said.