NTT DoCoMo turns Tower Records Japan into subisidiary

Japan's largest mobile operator, which first took a stake in the music retailer in 2005, says it will look to create new mobile services

NTT DoCoMo said Monday it will increase its share in Tower Records Japan, turning the music vendor into a subsidiary in a push to expand its line of mobile services.

DoCoMo said the deal, which will increase its share in Tower Records to 50.3 percent from 42.1 percent, is part of its ongoing efforts to offer value-added services on top of its traditional voice and data plans.

"DoCoMo will focus on value-added services that leverage synergies between mobility and Tower Records Japan stores, both online and retail," the operator said in its press release.

The operator is Japan's largest but has lost subscribers to rivals, in part because it does not offer Apple phones and tablets. Japan's mobile market is largely saturated, with little growth each year, and the company is hoping to woo consumers and fatten margins with such offerings.

As part of its service lineup, the company said last month it would expand its cloud services, which include a translation feature for text messages, an online voice-activated concierge similar to Apple's Siri, and a photo storage service that offers 5GB of free space. The company also offers a mobile fitness service and its own app store, with billing integrated into monthly call charges.

DoCoMo took the original stake in Tower in 2005 in a deal worth over US$100 million at the time. It did not release a price for the increased investment announced Monday.

Tower Records entered Japan in 1979 and gained independence from its now bankrupt U.S. parent in 2002 through a management buy-out. It operates 89 stores in the country, where it is a household name for CD and DVD sales.

Tower's foray into online music, a streaming joint venture with Napster, was shut down in 2010. Napster Japan offered unlimited downloads to users' PCs but was unable to attract enough contracts to make a profit.

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