Disney to enter Japan cellphone market in spring

A booth assistant checks out a mobile phone in Chiba, east of Tokyo, September 22, 2006. Walt Disney Co, the No.2 U.S. entertainment company, plans to launch mobile phone services in Japan early next year to become the newest entrant in an ultra-competitive market.

TOKYO (Reuters) - Walt Disney Co (DIS.N), the No.2 U.S. entertainment company, plans to launch mobile phone services in Japan early next year to become the newest entrant in an ultra-competitive market.

Disney, which plans to halt its U.S.-based mobile phone service in December, is now eyeing demand for its online contents in the world's biggest market of third-generation phones, officials said on Monday.

Disney would use local mobile phone carrier Softbank Corp's (9984.T) network and the two would jointly develop mobile phones and content, the two firms said in a joint statement.

For Softbank - another new entrant which has been winning users with its low-cost price plans - the agreement could be a key to induce subscribers to use their phones for more downloads and switch to pricier handsets and calling plans.

But while the phones might appeal to hard-core Disney fans, children and adolescents, they are unlikely to win more than 100,000 to 200,000 subscribers - a tiny sliver of a market of 100 million mobile phone users, said Michito Kimura, a market analyst at research firm IDC Japan.

"Softbank is eyeing long-term growth from this partnership, and the question is if Disney will stick it through," Kimura said. "You need to constantly come up with new and quality content to keep users interested."

Disney took a $30 million charge last year when it shut down another phone service, Mobile ESPN, which it ran on Sprint Nextel Corp's (S.N) network.

Initial costs of building base stations have prevented many would-be entrants into Japan's mobile phone market, dominated by NTT DoCoMo Inc (9437.T), No. 2 KDDI Corp (9433.T) and No. 3 Softbank, which bought Vodafone's (VOD.L) local unit in April last year.

In Japan, carmakers and telecom ventures have used carriers' networks, but the basebands have been used to enable car navigation or PC data transmission.

(Additional reporting by Noriyuki Hirata; Editing by Malcolm Whittaker)