RPT-UPDATE 2-Dwango to list game unit, jazz up video website

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By Sachi Izumi and Noriyuki Hirata

TOKYO, Sept 10 (Reuters) - Japan's Dwango Co (3715.T) said on Wednesday it plans to list its game unit and aggressively expand advertising space on its popular video-sharing website, aiming to double the number of users in a year.

President Hiroshi Kobayashi also told Reuters in an interview that the company will launch a French version of the video-sharing website.

Dwango's shares climbed after his comments, ending up 2.7 percent.

Kobayashi said the company was preparing to list its unit Games Arena, in which it owns two-thirds and which serves as the main company for its game business.

"The unit has good products, but unless it has sufficient capital it would reel if we had a series of flops," Kobayashi said.

Dwango's game division accounted for 18 percent of its 18 billion yen ($168 million) in revenues for the nine months ended in June. He declined to comment on the likely timing of the listing.

Loss-making Dwango garners much of its revenue from the sale of content for mobile phones such as ring tones, but its video-sharing site, Nico Nico Douga, is expected to be the main engine of growth in future.

Nico Nico Douga -- which means "smile smile video" in Japanese -- is similar to YouTube but users' comments are scrolled above or across the video. The number of registered users has shot up since its launch last year to top 9 million.

Dwango plans to find a business partner for Nico Nico Douga in Europe to help beef up the site and expand marketing opportunities in the region.

"We see big potential in Europe," Kobayashi said, adding that Europeans tend to like many types of Japanese sub-culture such as anime which are popular on the site.

It has already introduced Spanish and German versions of the site as well as a Taiwan version.

"I don't know if there are companies that offer the same kind of services, but we hope to tie up with companies who are very knowledgeable about local culture," he said.

In Japan, Dwango has been adding services such as communities, shopping and games in an attempt to attract viewers and get them to stay on the site longer.

Kobayashi said the company plans to offer more types of video categories like the political "Yuri Channel" by former defence minister Yuriko Koike, one of the candidates vying to become Japan's next prime minister.

"The first 3 million or so users were mostly people in their 20s, but now it's expanding to people in their 30s and 40s," he said.

"As we expand the number of users to 10-20 million, we hope to attract people of all ages and more women."

It will also start a new fee-based service for Nico Nico Douga from October.

Dwango posted losses in the last two business years and aims to break even in the year ending this month. By expanding advertising space more than five-fold and possibly hiking its advertising fees, the company aims to post a profit in the next business year.

Dwango, which is 20 percent owned by music label Avex Group Holdings (7860.T), has been successful in attracting foreign shareholders. The ratio of their holdings more than tripled to 17.3 percent in the half year to last March.

Dwango's shares ended at 157,000 yen. ($1=107.17 Yen) (Reporting by Sachi Izumi and Noriyuki Hirata; Editing by Edwina Gibbs)