The Reasons for Concentration within the Internet Industry : Why Companies Concentrated in the Shibuya-Akasaka Area

ABSTRACT

Previous research concerning the new media industry cluster in San Francisco and New York revealed that the geographic concentration of firms aided strongly the growth of the new media industry. Factors that contributed to the clustering of firms in these cities include amenities for young people, groups of artists, cheap rent, educational resources, and related industries. Moreover, subsequent research on Tokyo's new media industry showed that firms are intensely concentrated in the Shibuya-Akasaka area.

This report will verify the hypothesis that the uneven distribution of firms within Tokyo has occurred because of the difference of amenities available for young people. An econometric analysis of this hypothesis is employed, using two unique databases: FRI's Tokyo New Media Industry Database, data for which was obtained through thorough investigation of the new media industry in Tokyo's 23 wards, and Pia Digital Corporation's Database, which sorts amenity facilities for young people in the Tokyo area.

Results of this study indicate the following: (1) besides the external effects of existing agglomeration, amenities influenced the formation of agglomeration at an early stage; (2) influential amenities are characterized by small and diverse facilities, like music clubs, rather than by large facilities that are few in number, like theaters.

The most effective way to facilitate the growth of the new media industry is for the government to proactively support existing agglomeration, but to refrain from creating new agglomeration where amenities are lacking.

Introduction