Introduction:

If 39 year old Masayoshi Son were a surfer, you'd probably see him happily cresting the summit of 20 meter tsunami waves. As president and CEO of Softbank, 39 year Son has seen the company he founded in 1981 grow from a small-time software distributor to a multimedia conglomerate controlling 16 major subsidiaries. This guy from an obscure village who skipped high school in search of the American Dream now employs some 4,500 people with sales of 171 Billion yen ($US1.5 Billion) in 1996. Son was one of the first of his generation to foresee the oncoming digital revolution and struck quickly when, as an undergraduate at Berkeley, he patented a multi-lingual pocket translator which was to become the origin of Sharp Corporation's successful Wizard product series.

Son's eyes, fervently visionary are now glued to the skies. He now predicts digital satellite television will spearhead Japan into an information soaked mega-media society. Last November Son astonished Japan's media and business industries by entering into a joint venture with Rupert Murdoch to launch J Sky B, sowing the seeds of a digital broadcasting war with DirecTV, a competing digital satellite TV service to be launched this year in Japan.

By allying with Japan's first digital satellite program provider, PerfecTV last autumn, Son has lead Murdoch into a grand J Sky B - PerfecTV alliance that share the same satellite and the same decoding technology. With DirecTV not due to come on line until later this year, Son predicts that the battle is already won.

In this exclusive interview by Paul Kallender for Japan Space Net, Son shared his thoughts on the impact of the digital satellite broadcasting revolution, his unique relationship with Murdoch and the personal ambition that has lead Softbank to the very heights of the global information battleground.

*******STOP PRESS************************************
In late news Softbank and News Corporation will sell
their recently acquired 21% stake in Japan's Asahi TV
Networks back to Asahi Newspaper Group
*****************************************************

The Interview: January 1997

PLEASE NOTE THIS INTERVIEW IS ONLY LIGHTLY EDITED

Q. You have described digital satellite broadcasting as heralding a second industrial revolution. Can you paint some broad brush strokes of what you feel will happen regarding its impact on peoples' lives?

A. People will always try to be much more intelligent and, people will have the access to all kind of information so people will have a lot more productivity and have a happier, and more enjoyable life, and so on...

Q. The first industrial revolution created a new class of urban poverty. There seems to be a growing concern that we'll create new classes of information rich and poor.

A. Well, whenever there is technological evolution or revolution, there are a group of people who will have a very good understanding of these paradigm shifts, and there are other groups who have had less understanding. This has caused some gaps between people. This always happens. The same thing occurred when the automobile was introduced. People who could drive automobiles could achieve more productivity in their business, their way of living life. And when the telephone was introduced, people who were able to utilize telephones accrued a big advantage over those who didn't have access to that kind of technology.

Q. So you are suggesting the same thing will happen with the digital technology revolution?

A. The same thing will happen again, but people have been able to overcome these difficulties over time. So every time, when technology advances so that it becomes much more user-friendly, many average people will develop easier access to those technologies. The information revolution is something that will empower average people, who will become able to exploit it. But there will always be some people who will be left behind, that's something that we always have to consider carefully in terms of education to let them gain an understanding. And in terms of the production efficiency, new technology usually becomes less and less expensive over time so that almost anybody can purchase and use it. That will happen, but during the transition period, there will always be an effort that people will have to make.

Q. What do you think about the future of Internet TV's as a way to ease people into cyberspace?

A. Well, that's one way, but Internet TVs are one of the slower means to access information; and personal computers can achieve much faster access and have the advantage of being equipped with full keyboards and faster modems. But when digital satellite broadcasting starts, it will provide information on the Internet and this will help people into the Internet.

Q. Are you referring to interactive TV?

A. Yes.

Q. On a simple level do you see the digital satellite revolution opening up the world of English language media in Japan, internationalizing Japan more?

A. Yes, digital satellite television will definitely help because in the past, when there were only a few terrestrial stations broadcasting, the number of channels was limited, so the number of English programs were similarly limited. But with the greater number of channels offered by J Sky B, we'll be able to provide all kinds of English based programming, which will include more English-based news and entertainment content. It's these kinds of programs that will expose Japanese more to English.

Q. PerfecTV! seems to have spurned a number of aggressively marketing and expanding multi-talented production companies. This seems a big potential shake-up. You are reported to have said that 1997 will be a year of turmoil for the Japanese broadcasting world. What do you anticipate will be the impact of digital satellite TV on the Japan's terrestrial TV industry?

A. Terrestrial TV stations will continue to remain powerful. Firstly because they are free and secondly because they will continue to be watched by the vast majority of people. However the digital satellite broadcasting revolution will provide new kinds of usage for the viewers for one thing, and secondly it will provide more access to different varieties of content so it will supply more freedom of choice on information content.

Q. So what sort of an impact will this have?

A. The impact of this will be as a stimulus; it will stimulate the existing terrestrial broadcasting companies so they will be forced to start thinking about how they can renew their methods of contents production.

They have already had an extremely good year in terms of their advertising revenues, with many of the them achieving record profits.

Q. What about a few years from now, if subscriptions to satellite TV explode. Do you foresee job cuts?

A. There is not any strong trend to downsize in itself, but the terrestrial stations would have to start providing all kinds of new services and tailor their programming to give it a digital sort of look, fill in their contents and so on. Maybe they'll try to provide contents to us so that they will even be able to extend their businesses and try to create a lot of study, maybe an alliance with us.

Q. Why the deal with Asahi and not another entity for contents provision? I know the opportunity came up with Obunsha, but you seem worried about Japanese contents provision, aside from movies, home shopping and sports channels. How important is Japanese provision and how will you maintain quality?

A. Yes we think that Japanese content for the Japanese audience will be a key component. We have to get good quality contents from all kinds of sources. And in Japan, TV Asahi has good content. Even with the content that they have not broadcast, they have lots of good sources. Say for example with interviews that maybe broadcast for 30 or even 5 minutes. Studios may often have up to 10 hours of unshown tapes. The remaining source material can be edited or reedited and then shown to those people who have more than five minutes of interest in the contents. In this kind of way digital satellite broadcasting offers the terrestrial companies a very good opportunity to extend their resources without increasing costs almost at all. They'll be able to extend their reach to the people who have an interest in those contents.

Q. So you see present television as too restrictive?

A. Because in the past here were a limited number of pipes, a limited number of channels, that was the bottleneck. If the number of channels increases they can output their unused content.

And so, TV Asahi was one of the strong possibilities for us to form an alliance with so that we can have a working partnership, but I'm nor looking just at TV Asahi, but all the terrestrial channels and production houses who work for them. We'd like to wok with many of them, not just one or two.

Q. We noticed that Rupert Murdoch came on a big shopping trip when he came to Japan last Autumn around the various TV companies for programs. Are you doing the same thing?

A. Yes in fact we are doing this together, Rupert and myself. And in the beginning they were a little bit cautious but now gradually they are opening up their minds and saying "Wow this may be a good opportunity to increase our profitability and increase their business opportunities," so they have been quite interested in meeting with us. We feel very, very happy about this change.

Q. Would it be fair to say that you joined with Murdoch out of despair over the DirecTV debacle? After all your reputation is as a leader who won't cede second place to anyone. Yet you made a very reasonable offer in the aborted DirecTV negotiations.

A. Yes, that's somewhat true. I originally asked DirecTV to consider letting us participate in an equal partnership with Hughes Space and Communications and Culture Communications Club, but they said it wasn't really possible...well we have to get into this market, so I then said to them if that wasn't possible, then we'd make do with 10 percent or even five percent stake. Let me know what the opportunities are, what the possibilities are. And they didn't respond. I asked them many, many times, and I said if you don't respond, I have to agree to other possibilities and opportunities. And still they didn't respond. So I made up my mind and then, by chance, Rupert visited Japan, and we had dinner together and he said that he is going to launch J Sky B so I said "Wow! Let me be apart of it, let's do it as a joint venture..."

Q. I thought that you'd invited Rupert Murdoch over..

A. Yeah, well he'd decided to start J Sky B by himself and parallel with that I was making up my own mid to start something by myself.

Q. How did you strike the deal?

A. I said to Rupert, "Well if you've made up your mind to start J Sky B, I've made up my mind to start something by myself, so of course, why don't we work together?" and he said "OK!"

Q. I know you and Mr Masuda, the president of DirecTV were close friends. Did it hurt you personally when he betrayed you?

A. I've happened to know him from a few years ago, not very long, two three years ago, so after we met we happened to get close to each other. He was the one who first asked me to join him, so I said OK. And before he asked me I'd decided that sooner or later I'd have to get into Video on Demand, so I stared a joint venture with NTT called MediaBank. As a long term strategy I had already decided to go for Video on Demand, but before I got into Video on Demand, satellite TV became a very realistic opportunity so I decided to opt for satellite broadcasting before the fiber optical based Video On Demand system, so he invited me, he asked me to join him, I said fine, then he gradually, you know, changed his mind, and so on... or maybe he didn't change his mind, but he just didn't respond. I understood that he had to talk to Hughes and the other guys and so on, but while we were discussing he announced that he would have Dai Nippon Press and Matsushita as partners.

Q. This must have sounded odd.

A. This was something strange, as we were negotiating with him simultaneously. Why announce a deal with someone, who wouldn't have any more to contribute than we would? Who could do maybe the same, but maybe less than we could. I don't know. Can you think of a printing company, a press company, how can they be much more important than we can? They only print, magazines , newspapers, flyers. They can be good at what they do but they are not the sort of company required for this. So I was, you know, a little puzzled. What's going on?

Q. You are reported to have told Murdoch that you were willing to do anything to open digital satellite TV in Japan, and you struck up a personal relationship. How has it been negotiating with, and then working with Rupert Murdoch?

A. He's excellent. I and he share the same kind of spirit. Of course he is much bigger and much more successful, and so forth, but I think when he was younger like myself, he was probably exactly like myself of today. I think he remembers that... when I talk with him, he treats me exactly as a partner, yeah, so that makes me feel very happy. Well, I can call him anytime, to his home, in the evening, in the early morning, he doesn't mind. He really enjoys talking with me, and I really enjoy that. I feel honored and happy. I'm learning a lot from him. It's chemistry.

Q. In joining with Murdoch you have allied Softbank with perhaps the world's most powerful media conglomerate. What are the advantages for Softbank in the deal and are there any dangers?

A. The obvious advantage is that he has the contents that we can define. The second thing is that he has developed a successful formula. He is the only one who has a very successful and profitable business in satellite broadcasting with B-Sky-B. That's, you know, a proven success. And he has the volume. He's started A Sky B in the United states, B Sky B in the UK, and J Sky B and I sky B, and he owns Fox and Star TV, he has the volume that we can purchase. This enables us to procure both the contents and the hardware and so on, and the volume really helps. And most importantly, he has the fighting spirit, the will to succeed, so it's wonderful to have a partner who shares the same kinds of perception that helps me to even bigger and better success. If I was doing this all by myself, the probability for success would be much smaller. But an alliance with him increases our chances of success tremendously. I don't see any dangers, I only see the upside.

Q. Some people believe that DirecTV is coming too late, that the market will be saturated. Yet DirecTV has the backing of some very powerful entities too. Can you delineate some of the features of the soon-to-come war between J SKY B and DirecTV. Who is going to win, and why?

A. It's simple. We will win. And the reason behind this, first of all, we have much better contents, and we will get much better contents. The second is the power and economies of sale we can lever, thirdly J Sky B and PerfecTV! agreed that we would work in partnership, and DirecTV! is not in this loop. So this situation is exactly like VHS versus Betamax, I don't think I have to explain what happened to Betamax. Another parallel is Windows versus Apple, right? The customer wants to have a secure feeling of the product's continuation, support and prosperity, because they have to invest in their receiver box and antenna, they can't have more than one in most houses, so they have to make a decision and we have helped them ease their decision.

Q. I heard that there was a lot of pressure form the ministry of Posts and telecommunications to adopt a common standard for the decoding technology.

A. That was good. But the satellites are so far away. Even if their box is compatible, the antenna would still need to be focused onto their satellite, or our group of satellites, and our antenna can receive both PerfecTV and ourselves and the earlier BS satellites. But their satellite is so far away, that even making the box compatible is not the only issue.

Q. You're talking as if you have already won..

A. Yes, I think so. I think it's already apparent.

Q. People have said that your strategy is to command multiple information streams, lay dams across them and siphon off the profits. Yet, it's said that you'll spend all your time devoted to digital satellite TV. But a recent announcement said that you intend to continue to expand your portfolio of small firms, particularly in the U.S. Has there been a significant change in your business strategy?

A. Our company mission is to become the infrastructure provider for the digital information industry. We would like to see the digital revolution come to fruition. That's our company mission. And, keeping that in mind, PC's and TV's and telephones, which are now different sets of products will merge, integrate and become networked, so we are extending our business reach not only from PC software, but also to Local Area Network the Wide Area Network, the Internet and digital satellite broadcasting. So that's what we're doing. We will not throw away the business that we have been developing, we are adding, integrating and accumulating all those businesses and we have to enhance whatever business we have been doing, especially the Internet. We already have a portfolio of 62 companies in the United States, and we want to extend them to at least a 100 companies by the end of this year, while continuously leveraging our existing resources.

Q. When you were younger you formed a fifteen year plan to build a business with sales of 1 trillion yen. You are approaching this. Is it true that you have a 30 year plan. Some say you have the heart of the true U.S. entrepreneur. What do you intend to do and what gives you the courage to leverage your opportunities and expand them so quickly and aggressively?

A. When I was 19 I made up my mind to formulate a 50 year life plan. In my 20's I would announce to industry that we existed. Then in my 30's I would expand my business to accumulate enough seed capital for the next stage, which I imagined would take at least 1 billion dollars. In my 40s I would set out to challenge something really big, I mean investing 10s of billions of capital in big projects. In my 50s I planned to accomplish these and succeed in these businesses so that in my 60s I would to pass the baton to the next generation of Softbank leaders. That, roughly was my plan.

To me, to reach 10 billion dollars in revenue was just a milestone, only a kind of target. We are now reaching the five billion dollar range...this March we achieved the 3 billion dollar range. In 1997 we will hit five billion dollars. We are growing very quickly so that I mean reaching the 10 billion dollar target is almost automatic for us within a few years. The number is not a goal, just a measure, only a milestone. I'm now developing a 300 year plan.

Q. What's the new plan?

A. My 300 year plan is still in the process of being worked out.

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