IT companies scramble to take advantage of Shibuya's transport networks, proximity to youth culture

by Kazuaki Nagata

Staff Writer

Shibuya is famous for its scramble crossing, shopping and youth culture but the district has also established itself as a hub for myriad IT firms and Internet-based startups, leading some to describe it as the equivalent to Silicon Valley in the U.S. state of California.

Industry experts say such firms choose to be based in Shibuya in order to be within close proximity to young people, who are often the target of their services.

Convenient transport networks and proximity to other IT ventures are typically cited among other reasons for deciding to be based in Shibuya, with many firms saying it’s easier to exchange industry information or organize events.

“We are located in Shibuya because it’s a great transportation hub and being based here enables us to stay familiar with youth trends,” says Sae Mashimo, a spokeswoman at CyberAgent, which creates smartphone games and is best known for its online platform, Ameba Blog.

Shibuya stands head and shoulders above other wards in the capital in terms of the number of Internet ventures that have set up shop there. According to Tokyu Research Institute, a subsidiary of Tokyu Corp., 588 IT firms had offices in Shibuya Ward in 2013, the highest among Tokyo’s 23 wards. Minato Ward took second spot, with 501 firms registered in the area, a figure boosted by the fact that Roppongi is home to many well-known companies — Google, Apple and Yahoo Japan.

Shibuya’s ties to technology is believed to have started in the mid- to late-1990s, as the general public became more familiar with the Internet. A number of Internet-based firms set up their offices in the district around this time.

At present, household IT names located in the district include messaging app giant Line Corp., Mixi Inc., a smartphone game maker, GMO Internet Group, which provides a variety of Internet services, including domain registrations, and DeNA Co., which makes the Mobage mobile video game platform.

DeNA has opened an office in the Hikarie complex on the eastern side of Shibuya Station. It cites similar reasons to CyberAgent — transportation access and proximity to youth culture — for choosing to be located in the district. It also highlighted Shibuya’s international standing.

“When people say ‘Tokyo’ on TV outside of Japan, they invariably show Shibuya’s scramble crossing,” DeNA spokesman Tomoyuki Akiyama says by email.

As DeNA aims to expand its overseas market, the company sees Shibuya’s prominence as an asset. “Shibuya is viewed internationally as being a symbol of a futuristic Japanese metropolis,” he says. “People can be proud to tell others that they work in Shibuya.”

Hideto Sekiguchi, director at realtor Clear Vision, lauds Shibuya’s close proximity to the Internet community. Not only does the district have companies working in the industry, he says, it also has investors.

Venture capitalists such as East Ventures and Skyland Ventures have set up offices in Shibuya, while CyberAgent and DeNA also invest in startups as well.

Venture capitalists are keen to energize the communities. East Ventures and Skyland Ventures created a collaborative space called HiveShibuya near the 109 fashion complex about four months ago.

“We want to create this kind of workspace because we think it will help facilitate communication and collaborations among venture firms,” says Seina Sakaue of East Ventures, which invests in more than 100 startups in Japan.

HiveShibuya is a shared workspace for startups that East Venture and Skyland Ventures either invest in or have ties to. Most of these startups are managed by people in their 20s, including college students.

Sakaue says Shibuya is especially popular among young entrepreneurs.

“We ask startups that we invest in whether they would like to reside in Shibuya or Roppongi,” she says. “About 90 percent of investors who are in their 20s chose Shibuya.”

This is probably because Shibuya feels familiar to young people, she says, so they feel more comfortable being located there.

While Shibuya may be an attractive place to start a business for young people, other established firms there don’t appear to be particularly attached to the place.

Line has already announced plans to move to Shinjuku, as it has been growing and is now seeking a bigger office.

Mashimo of CyberAgent says the firm is not hellbent on staying in Shibuya and might consider moving to another location somewhere in the future.

The rental price per commercial unit in Shibuya has actually been increasing recently, says Sekiguchi of Clear Vision. It used to be about ¥10,000 per 3.3 sq. meters, but is now about double the cost for the same space. As a result, a growing number of entrepreneurs are choosing cheaper locations these days. If leading IT firms such as CyberAgent leave Shibuya, they might take others with them.

However, Shibuya’s popularity among IT firms and startups remains strong, so most industry observers believe the place will continue to attract such firms.

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