NTT Docomo acquisitions: Tower Records – No music, no life!

Docomo acquires Tower records

Docomo acquires music retail know-how and a laboratory for mobile payments at the point-of-sale

NTT Docomo acquisitions: 32.34% of Tower Records a major share of Japan’s second largest Credit Card issuer

Nikkei reports several NTT Docomo acquisitions: DoCoMo will use a total investment of around YEN 10 Billion (approx US$ 100 million) to acquire 32.24% of Tower Records Japan’s shares from Nikko Principal Investments Japan Ltd, and additional shares in a third party allotment taking it’s stake to around 40%. Tower Records Japan plans an IPO, and DoCoMo apparently intends to keep a 33.4% controlling stake even after the IPO.

Tower Records Japan was founded by the US-company Tower Records in August 1979 in a pioneering entry by Tower Records into the Japanese market. At that time, almost all foreign companies entering Japan formed a joint venture with a Japanese company or licensed their brand to a Japanese company. Tower Records instead acquired an unrelated Japanese company with the same name (“Tower Records”) and built it’s business in Japan successfully alone without a Japanese joint venture partner.

In October 2002, Tower Records Japan became independent of the US mother company through a Management Buy-out by Japanese management.

NTT Docomo acquisitions strategy

Repordedly, DoCoMo aims to implement many synergies including:

  • promotion of mobile FeliCa wallet phones for mobile payments
  • use of mobile FeliCa wallet phones for customer relationship management (CRM), reward points, and customer data collection for marketing purposes
  • Napster Japan: Since about 1/2 of official content sales of i-mode is from mobile music, and since Tower Records Japan is about to launch Napster-Japan in a joint venture with Napster, we expect DoCoMo to become involved in online music distribution through Napster Japan.

NTT Docomo acquisitions: The bigger picture

Acquisition of a controlling stake in Tower Records is the latest step in a string of investments by DoCoMo, to expand revenue into new areas independent of ever shrinking voice and data traffic related charges. Recent investments include:

  • Mitsui-Sumitomo Credit Cards (Japan’s No. 2 credit card issuer)
  • joint venture with Rakuten for mobile auctions

With more than 100 stores the Tower Records Japan investment will give DoCoMo an excellent experimentation ground to develop many new ways of using FeliCa wallet phones in a real-life retail environment.

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