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Media & Entertainment

NBA deal poised to pay off for Japan's Rakuten after fast break

E-commerce giant hopes for boost from streaming top draft pick Hachimura's debut season

TOKYO -- Japanese internet billionaire Hiroshi Mikitani has an eye for flashy sports deals. The spark for his e-commerce group Rakuten's broadcasting contract with the National Basketball Association came not in New York or Tokyo, but in the U.S. state of Idaho.

It was at a Sun Valley resort there in July 2017 that Mikitani met Adam Silver, the lawyer-turned-NBA commissioner.

Mingling among corporate leaders, investors, sports stars and celebrities at an invite-only conference hosted by investment bank Allen & Co., the two became "instant friends," Silver later said.

The power of the deal that sprang from their meeting was apparent during the 2019 NBA draft in June, when teams pick amateur players. Rakuten TV's livestreaming of the event, in which top prospect Rui Hachimura became the first Japanese player ever chosen in the first round, racked up more than 1 million views in Japan.

Their Idaho encounter came at a time when Rakuten -- Japan's biggest e-commerce group, with online shopping, travel and brokerage businesses and now a new mobile telephone service -- faced the challenge of raising its profile overseas.

A few months later, Mikitani and Silver were standing together in Tokyo, announcing a deal under which the Japanese company would exclusively distribute NBA games in Japan through the Rakuten TV video platform, starting in the 2017-2018 season.

Noting that they he and "Mickey" had just met that summer, Silver said: "I think this must be an all-time record from the first meeting to concluding a business arrangement."

Rakuten founder Hiroshi Mikitani and NBA Commissioner Adam Silver.

The NBA is an enormous presence in the world of sports, with its games aired in about 50 languages in 215 countries and territories. On social media, the league commands more than 1.6 billion "likes" and followers, including player and team accounts.

Mikitani felt the NBA's appeal from courtside. A frequent face in Silicon Valley, he would often attend games during his long stays on the U.S. West Coast.

Rakuten's involvement with the NBA "involved some upfront investments, but we've reach the stage where we can expect to reap profits," Group Executive Vice President Makoto Arima said.

Mikitani was well aware of sports' power to compete for media consumers' eyes. In 2004, Rakuten acquired the Golden Eagles professional baseball team -- a deal that raised the company's profile in Japan and accelerated its business, according to Arima.

This was Mikitani's "formative experience" in sports deals, Arima said.

Rakuten also sponsored the Association of Tennis Professionals tour in 2009 and signed a partnership contract with soccer club Barcelona in 2016. In 2018, Rakuten-owned Vissel Kobe of the Japan Professional Football League, better known as the J. League, acquired Andres Iniesta from the Spanish soccer club.

But in Mikitani's eyes, basketball was different.

"Its excitement is amazing in a way totally different from soccer," he would say. "There are flashy plays that add another element of entertainment. I would say its completeness as a form of a sport entertainment is No. 1 in the world."

That said, the NBA was facing an uphill battle in the Japanese market. Although satellite broadcasters WOWOW and NHK-BS had aired NBA games for years, the league was little known to the general public in Japan compared to its global popularity.

The NBA was searching for ways to elevate its brand value, said Laura Li, program lead of Rakuten's NBA partnership.

In that sense, Rakuten -- which boasts a membership of more than 100 million, with more than 70% of them active users -- was an attractive tool for the NBA to enhance its visibility through various channels.

Rakuten moved quickly, too. Before striking a deal with the NBA, the Japanese company also signed a partnership agreement with the Golden State Warriors, one of the most popular NBA teams. It regularly invites Stephen Curry and other popular NBA players to events in Japan and builds a community for fans via the website. The first NBA game in Japan in 16 years will be held in October.

The company can also fuse the NBA with hip-hop music and fashion, Li said.

Rakuten's partnership agreement had an immediate result. At its peak last season, the number of Japanese NBA League Pass subscribers grew more than seven times compared with before the Rakuten tie-up.

Golden State Warriors star Stephen Curry offers advice to high school athletes at a basketball camp in Tokyo.

Japan has always been a market of great value to the NBA and the partnership with Rakuten has elevated us to a new level, said Scott Levy, executive vice president and managing director of NBA Asia.

NBA players became eligible to play in the 1992 Barcelona Olympics, and the U.S. men's national basketball team -- more commonly referred to as The Dream Team, comprised of NBA stars like Michael Jordan and Magic Johnson -- sent global interest in the sport to new highs. Japan was no exception, with the serialization of the high school hoops manga "Slam Dunk" helping spark a basketball boom. But Japanese excitement had faded away before the turn of the 21st century.

Now, about 20 years later, two Japanese players -- Hachimura of the Washington Wizards and Yuta Watanabe of the Memphis Grizzlies -- could face each other for the first time in the 2019-20 season, which kicks off on Oct. 22.

Rakuten acquired the best content at a perfect time, when Japan is expected to have a bigger basketball boom than in the 1990s. A partnership with the Golden State Warriors -- which advanced to the finals for the fifth consecutive season and won the NBA championship three times -- has pushed up Rakuten's visibility in the U.S. to about 30%.

Rakuten plans to launch mobile phone service in October, coinciding with Hachimura's NBA debut, in the runup to the introduction of 5G networks in Japan next spring.

The NBA is also waiting for the right opportunity, as when it used the rise of Yao Ming, a Chinese basketball star who got chosen by the Houston Rockets in the first round of the 2002 draft, to make basketball a regular favorite in China.

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