UPDATE 1-Japan's Mixi seeks partners, eyes N.America,Europe

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By Sachi Izumi and Noriyuki Hirata

TOKYO, Aug 27 (Reuters) - Japan's dominant social networking site Mixi Inc (2121.T) is seeking partners to help widen its appeal as it eyes an expansion drive in North America and Europe, its chief executive said on Wednesday.

Mixi has built up its own applications and services since launching in 2004 but is now ready to tap outside expertise to boost users and page views, said Kenji Kasahara, who is also the founder of the company.

"We want to involve outside companies and users to make and to energise Mixi," the soft-spoken 32-year-old millionaire told Reuters in an interview, adding the company would also consider capital tie-ups with possible partners.

"This would encourage users to visit the site more frequently or stay longer, and it in return could help expand the membership itself," he said. "As a result, it could ... increase incomes from advertisements and fee-based services."

Mixi, which competes with Yahoo Japan (4689.T), Rakuten (4755.Q) and DeNA's (2432.T) Mobage-town, is Japan's top SNS service with over 15 million users, or some 12 percent of the country's population.

It logs about 14 billion page views a month, about two-thirds through mobile phones, but the number of users is still one-tenth of what News Corp's NWSa.N MySpace has globally.

With eyes on China's 250 million Internet users -- the world's largest -- Mixi launched a Chinese site from June, joining global leaders like MySpace and Facebook who had entered the lucrative market. Japan has about 88 million Netizens.

The Chinese social networking market is said to be tough for foreign firms due to government regulations, prompting some to invest in local operators instead of acting alone.

Kasahara declined to say when Mixi's Chinese operations would be in the black, but he suggested it took one to two years for its domestic business to start producing profits.

GLOBAL DREAM

After China, Kasahara said the company intends to enter English-speaking countries -- likely in North America and Europe -- although the service it would offer could be something other than the Mixi social networking site.

"We as a company want to make sure to bring our services to the English-speaking world some day," said Kasahara, who still owns 60.2 percent of the company.

"If we do business, we want to do so globally."

By expanding fee-based services and operations overseas, Mixi aims to widen its revenue sources to rely less on advertising fees that generated some 95 percent of its sales in the latest quarter.

Japanese firms are tightening their marketing budgets as the economic outlook becomes increasingly dim due to high material prices and weakening consumer spending, holding back the online ad market that used to show strong growth.

Economic woes are also weighing on Mixi's "Find Job!" employment search business.

"The Japanese market is limited," Kasahara said. "Potential is far bigger worldwide."

Mixi shares, listed on the Tokyo Stock Exchange's Mothers market, closed down 0.2 percent at 846,000 yen on Wednesday.

The stock has fallen over 40 percent since its 2006 debut but Kasahara still became Japan's 37th wealthiest person this year in Forbes magazine's Japan 40 Richest List with a net worth of $740 million. (Reporting by Sachi Izumi; Editing by David Cowell)