One of the leading Japanese providers of broadcasting media content, the USEN Corporation has stayed ahead of the competition for more than 50 years and expanded into IT business solutions, hospitality, and even medical institutions. President Kimimasa Tamura explains USEN’s approach to growth and the recent launch of its first capsule hotel, designed to make women travelers to Japan more comfortable.
Can you outline USEN’s business model, what unique competitive advantages it offers, and how you’ve been able to stay #1 in the music broadcasting sector for so long?
We started a music broadcasting service about 50 years ago. Starting from Osaka, we established networks all over Japan aiming for business expansion. At the moment, we have over 600,000 customers. In the 1970s, we had about 300 to 400 competitors, but we are one of the few companies that have outrun our competitors. Now, there are about 10 companies that provide a music broadcasting service like USEN.
There are several reasons why we were able to beat the competition. When the competition became intensified in 1980s, we established 800 branches all over Japan, and assigned 3,000 sales staff. The reason why we did that is we wanted to strengthen our sales with strategic dominance throughout Japan. Also, in comparison to other companies, we provided customers with innovative services and quality of music content and tuners. We have been developing this content to gain an edge over our competitors. As of now, we broadcast more than 500 music programs responding to a variety of needs using cable, satellites, and networks; we have various ways of delivering the music. We fit to the trend and market needs, and this is why we beat our competitors.
Within your portfolio of companies and services, where do you see the most opportunity for growth and what are the biggest obstacles to achieving it?
We are the leading company with a large market share in the BGM (background music) service industry, where consumers acknowledge our services. Taking this advantage, we aim to continue providing services that are needed in shops such as Wi-Fi systems, registers using iPads, and IP cameras, to become a provider of total solutions. When a new store opens, we aim to provide a total solution that is involved with our customers.
USEN is well positioned to capitalize on the trend of rising tourist arrivals with your diversification into hospitality – specifically your capsule hotel in Shibuya is focused on foreign clients and the recent launch of your tourism information website, Cozy Japan. Can you outline your expectations and strategies for the tourism and hospitality sector?
First of all, there is the fact that we have our customer bases, such as restaurants, using our BGM service. We are seeing many overseas visitors visit those restaurants. We aim to work with the restaurant managers and other clients in order to attract overseas visitors. We opened our first capsule hotel in Shibuya at the beginning of April. We named it “Nadeshiko Hotel Shibuya” and it is targeted at women overseas travelers. We expect this hotel will give us a lot of insight into how we best serve our overseas customers. This capsule hotel offers various types of services coming from the USEN Group. It is important for us to share the know-how and what we learn from the new hotel with our customers.
In terms of Cozy Japan, it’s a website that provides information about booking various types of accommodation, including unique hostels, capsule hotels and Japanese apartments, etc., as well as sightseeing, dining, and useful general information travelers want to know when they visit Japan. This is extremely specialized for overseas travelers.
As our focus of information is exclusively about Japan, it is highly optimized for overseas travelers who are visiting Japan and want to understand about Japan in the most effective way.
We provide a number of original videos introducing hidden local attractions in Japan. We hire local overseas residents in Japan as reporters of such videos as we think it is important to consider the interests from the perspective of overseas travelers.
Can you share with our US audience what type of experience it is to stay at your new capsule hotel, as this is quite a unique Japanese experience?
Our first capsule hotel “Nadeshiko Hotel” is located in Shibuya, which is one of the flagship cities in Japan. When you go to the capsule hotel, you can experience many things, such as wearing a yukata, buying Japanese souvenirs, eating food that is only provided locally in Japan, and walking around Shibuya wearing a kimono. These unique experiences are an added value to an ordinary capsule hotel, and it is our company’s original service.
Where do you see most opportunity to continue to grow USEN?
In terms of the music broadcasting service, we plan to expand through two bases: Shanghai and Singapore. Recently, many Japanese companies launched or expanded into the Asian market, so we plan to support them.
Prime Abe has promised a “robot revolution” including deregulation and research funding to double Japan’s robot market size in manufacturing from 600 billion yen ($5.3 billion) to 1.2 trillion yen. USEN has seen promise in this sector, recently teaming up with Unirobot Inc. to explore more opportunities in this sector. Can you share your expectations for this sector?
I would like to briefly explain about ALMEX. It sis pecialized in automatic payment systems and business hotel systems, and they are one of the most important subsidiaries in our group. The automatic payment systems are utilized in hospitals and golf courses, and they process accounting and other related procedures. We have some level of market share in Japan for these systems.
Referring to the “robot revolution”, we have not made any concrete decisions, but in this aging society, I’m looking for a different type of business that can enhance the added value to services in combination with these automatic payment systems and AI robots.
As you expand, would you be looking for foreign partners to expand overseas?
We currently do not have strong ambitions to expand worldwide, but as I’ve mentioned earlier, we would like to stick to and help Japanese companies that are expanding around Asian countries. We are not prepared for the expansion through partnership with overseas enterprises at the moment. However, we continue to consider business that offers music broadcasting and total solution services to Asian countries.
Central to your success is your commitment to community interaction and contributing to society, such as the “Table for Two” donations from Hitosara, your restaurant reservation service. Why are such concepts so important to your corporate culture and success of USEN?
Our gourmet site Hitosara demonstrates our contribution through the Table for Two initiative, where 10 yen is donated for each reservation and these donations are used for school lunches in Africa. We contribute through the Table for Two donations, but our main service is music broadcasting service. We also want to contribute to society through our music broadcasting service. Therefore, when natural disasters occur, specifically, when Great East Japan earthquake happened in 2011, people were evacuated to public facilities such as schools. We provided free BGM services to those institutions. Though the customers of our services are mainly business owners and shop managers, the listener of our service is the whole of Japan. It is essential for us to contribute to society by providing music broadcasting service for free with the purpose of healing the heart of millions of people when they need a sense of relaxation going through such tough experiences.
We estimate the total number of listeners to our services to be 400 million people per week. It is three times the population of Japan. We have a big market share, so if a person walks around the streets or visit some shops, it is quite possible that he or she has listened to our broadcasting services.
What would you say is the new brand of Japan as it turns the page from two decades of deflation?
Money and population are very concentrated in Tokyo, but there’s so much more to discover outside of Tokyo. When you look at rural areas, we can see problems with an aging population and decrease in productivity. However, as a country, the rural revitalization is important for Abenomics, and we Japanese take this problem to be all of our concern.
We would like to communicate to the readers to also look outside of Tokyo, Osaka, and Nagoya, and discover the attraction that resides in rural areas of Japan. Many overseas travelers tend to visit these big metropolitan cities only. Though Japan is a very small country, the land is filled with unique attractions from north to south. Although Japan is known mostly for some major metropolitan cities and technologies, we are hoping readers will discover the humbly hidden rural charm in Japan.