CyberAgent
Corporate History & Strategy

In the late 1990s, the internet was beginning to spread rapidly in Japan, and numerous venture companies were being founded. However, most internet companies at the time were technology-oriented, and many lacked a well-developed sales infrastructure. There were frequent cases of companies that possessed excellent services but missed growth opportunities due to insufficient sales capabilities.

While the market was in an expansion phase, sales functions connecting technology with customers were in short supply. Small internet companies in particular found it difficult to secure sales talent, and there was demand for outsourcing sales to external parties. This structural gap was emerging as a new business opportunity.

In March 1998, Susumu Fujita, then 24 years old, left the staffing company Intelligence and founded CyberAgent in Minato-ku, Tokyo. Despite his youth, he launched with a business model centered on "sales agency" work, leveraging his own sales experience.

Drawing on his track record of success in internet media sales as a new graduate, he first secured a sales agency contract for the payment processing service WebMoney. By not holding proprietary products and specializing in the sales function, he chose a strategy that minimized initial investment while riding the wave of market expansion.

The sales agency model rapidly expanded the customer base, establishing a certain presence within the internet industry. Through customer interactions, the company gained an understanding of the advertising market structure and formed the groundwork for identifying the next business opportunity. The founding-era experience directly led to the subsequent pivot.

The subsequent entry into cost-per-click advertising was made possible precisely because of the market understanding and relationships built through sales. The founding at age 24 became the origin of CyberAgent's growth into an advertising and media company.

In 1998, the mainstream internet advertising formats in Japan were impression-based and period-based, with advertisers paying based on the number of impressions or the duration of placement. Performance measurement was limited, and the relationship between advertising spend and results was opaque. Meanwhile, in the United States, performance-based advertising that charged per click was beginning to spread, attracting attention as a rational model for advertisers.

Newly founded CyberAgent initially had WebMoney sales agency as its main business, but during its sales activities encountered ValueClick Japan's cost-per-click advertising and took on its distribution. Responses from small and medium-sized enterprises in the field were positive, and the company realized the latent demand for advertising models that could clearly demonstrate cost-effectiveness. At a juncture when internet adoption was accelerating, the market expansion potential was judged to be significant.

The company decided to go beyond sales agency work and develop cost-per-click advertising as a proprietary product. It named the product "CyberClick" and pivoted the business axis from sales agency to advertising company. However, system development—including click measurement and fraud prevention—proved more difficult than anticipated, and the initial attempt at in-house development failed.

Consequently, a contract was signed with On the Edgj (later Livedoor) fully outsourcing development and operations. The contract specified a royalty of 10% of revenue and was structured as a five-year exclusive agreement starting September 1998. This prevented technology leakage to competitors while establishing the framework for entry into the performance-based advertising market.

Following system launch in October 1998, full-scale CyberClick sales commenced. Pricing was set at 140,000 to 180,000 yen for a guarantee of 2,000 clicks, with cost-effectiveness pitched by comparison to conventional direct mail costs. The primary customers were cash-strapped venture companies and SMEs, and a sales strategy distinct from traditional media was deployed.

Media acquisition progressed simultaneously, and by January 2000, 4,728 media outlets had been secured. A framework for matching advertisers and media through the system was established, and the company completed its full transition from a sales agency business to an internet advertising company. The commencement of sales in July 1998 became a symbolic turning point marking the departure from the founding business.

From 1999 to 2000, expectations for internet-related stocks surged rapidly in the Japanese equity market, and the Mothers market became the stage for growth company fundraising. CyberAgent was also expanding its advertising transaction volume, but the business was still in the red, and its valuation was based on the premise of future growth. At the time, stock valuations tended to be based not on earnings but on price-to-sales ratios (PSR), and growth expectations themselves were priced in.

As of September 1999, just before the listing, the valuation was approximately 150 million yen, but in just six months the valuation inflated dramatically. Overheated expectations for the internet industry created an environment that supplied massive funding to a company in only its second year of existence. Susumu Fujita determined that maximizing growth velocity required raising capital directly from the market, and chose an early listing.

In March 2000, the company achieved listing on the TSE Mothers market, raising 20.7 billion yen based on a valuation of 62.4 billion yen. With virtually zero interest-bearing debt, the company established a strong financial position with approximately 20 billion yen in net cash immediately after listing. Attracting attention as the youngest CEO to take a company public at the time, the company became a symbolic figure of the dot-com bubble.

However, the business was still in the red, and the valuation depended on future expectations. The use of funds was not clearly defined, and the company embarked on expansion-oriented management, including relocating headquarters to Shibuya Mark City. The decision to raise capital on the premise of growth was a bold choice that could only have been viable in a bubble environment.

When the dot-com bubble burst in the latter half of 2000, the company's market capitalization plummeted to around 10 billion yen, falling below its cash holdings of 20.7 billion yen. A divergence emerged between market valuation and intrinsic value, and in 2001 the Murakami Fund demanded cash distribution, among other pressures, forcing a reconsideration of capital policy.

On the other hand, the 20 billion yen-plus in funds served as a long-term safety net, enabling aggressive investment in ventures such as the Ameba business. While accompanied in the short term by the side effects of questions over fund deployment and stock price stagnation, the long-term securing of growth capital allowed the company to maintain a posture of continuous investment in new businesses.

Through the March 2000 IPO, CyberAgent had raised 20.7 billion yen and held approximately 20 billion yen in net cash. However, with the dot-com bubble's collapse, the market capitalization dropped to around 10 billion yen, leaving a situation where cash holdings exceeded the enterprise value. From shareholders' perspective, unless the use of cash was demonstrated, capital efficiency was extremely low.

Moreover, while founder Susumu Fujita's shareholding was estimated at effectively around 34%, this was not a level sufficient to stably control voting rights on his own. External shareholders such as Intelligence and USEN held significant stakes, and after listing, GMO acquired over 21%, meaning management control was not necessarily secure. The instability of the capital structure created room for external intervention.

In 2001, M&A Consulting, a limited partnership fund led by Yoshiaki Murakami, acquired approximately 9% of shares through MAC INTERNATIONAL. The total acquisition was on the order of approximately 900 million yen, with purchases made during a period of depressed market capitalization. The fund took issue with the situation where cash holdings exceeded market capitalization and requested a meeting with President Fujita to demand shareholder returns.

Susumu Fujita refused the cash distribution demand and maintained his policy of allocating funds to future investment. However, tensions around management control escalated, as there was a possibility that if the Murakami Fund sold its shares to GMO, GMO could hold over 30% and gain veto power. Capital policy had entered a phase directly tied to corporate survival.

At this juncture, Hiroshi Mikitani of Rakuten intervened, acquiring shares from GMO and demonstrating support for Fujita's management. In December 2001, Rakuten and CyberAgent concluded a business and capital alliance, ostensibly for collaboration in the e-commerce field, but in substance it served as a takeover defense.

Subsequently, the Murakami Fund sold its shares, and GMO also gradually disposed of its holdings. As a result, the capital relationships were sorted out and management independence was maintained. The 2001 battle demonstrated that post-IPO capital surplus and control issues were directly connected to management strategy, marking an important turning point.

Following the collapse of the dot-com bubble, CyberAgent began facing challenges in retaining mid-career hires recruited during the rapid expansion phase. By 2002, the attrition rate reached approximately 30%, creating a situation where even with 200 annual hires, approximately 100 employees were leaving. Recruitment expansion premised on growth had turned into a structure that undermined organizational stability.

Additionally, friction arose between mid-career managers in their 30s from large corporations and employees in their 20s who had been with the company since its founding, causing the chain of command to malfunction. Susumu Fujita attempted countermeasures such as gifting a portion of his own shares to employees, but these did not achieve a fundamental solution. The situation had entered a phase where redesigning the organizational culture was imperative.

In 2003, Susumu Fujita declared the introduction of a "lifetime employment system" and shifted course toward building an environment where employees could work long-term. Investment in benefits began, including a housing subsidy system (the "Two-Station Rule" providing subsidies for employees living within two train stations of the office) and the "Yasunde Five" policy granting five consecutive vacation days after two years of tenure. These were judged to be rational when compared against recruitment costs.

Furthermore, company-wide assemblies were held twice annually, fostering unity through awards and sharing. In 2005, an HR Division was newly established, and Tetsuhito Soyama was appointed as its head. The development of evaluation systems and interview frameworks was advanced, and talent retention was placed at the center of management priorities. Organizational reform was pursued on both the institutional and cultural fronts.

As a result of the reforms, the attrition rate improved to approximately 15% by 2006. As talent retention progressed, the sales organization stabilized and the expansion of the advertising business accelerated. The number of employees surpassed 1,000 in fiscal 2005 and 1,400 in fiscal 2006, with the organizational scale expanding sustainably.

This reform was not merely an expansion of benefits but signified a transition from venture-style fluidity to a long-term employment organization. Improved talent retention enhanced sales capability and business continuity, and the company established the organizational foundation to support its expansion phase. The 2003 organizational reform became the turning point for management stabilization.

As of 2004, CyberAgent's core business was internet advertising, with revenue proportional to the number of sales personnel. It was a labor-intensive model of securing advertising inventory and advertisers, and scaling required workforce expansion. Susumu Fujita recognized the need for a leverageable business not dependent on headcount and decided to enter the media business by owning advertising inventory.

Ameba Blog, launched in 2004, rapidly expanded traffic through celebrity blogs, but concentrated traffic on popular articles caused frequent server outages during nighttime hours. A structural problem persisted where growing page views did not proportionally translate into advertising revenue, and the break-even point remained elusive. The lack of scalability surfaced as a management challenge.

In July 2005, the Ameba Business Division was established, and Susumu Fujita assumed direct oversight of the restructured operation. The previous person in charge was reassigned, and the CEO made clear his posture of bearing direct accountability for results. Setting profitability by 2009 as a goal and indicating readiness to resign if the target was not met, he demonstrated the seriousness of the turnaround commitment to the organization both internally and externally.

Monthly page views were designated as the KPI, setting the metric most directly linked to advertising sales as the top priority. Approximately 6 billion yen in upfront investment was planned, and by separating the base of operations from headquarters, a standalone profit consciousness was instilled. The decision was to execute a large-scale investment within financial tolerance, using the funds secured at the time of listing.

Under the CEO's direct oversight, the organization was reorganized, and infrastructure expansion and content enrichment progressed. Page views expanded incrementally, and the growth in advertising inventory drove improvements in the revenue structure. While losses continued in the short term, the presence of the media business steadily grew.

As a result, Ameba grew into the pillar symbolizing the company's transformation from an advertising-dependent enterprise to one owning its own media. The approximately 6 billion yen in upfront investment carried risk, but the funds secured at listing made the challenge possible. The 2005 establishment of the division became the turning point at which the company took its first serious step toward becoming a platform company.

Ameba Blog had grown traffic through the rapid expansion of celebrity blogs, but concentrated nighttime access caused frequent server outages. Against a load of 15 million daily page views and 6,000 queries per second at peak, the outsourcing-centered development structure was unable to make rapid improvements. Even as PV grew, advertising revenue did not scale proportionally, and technical constraints were defining the ceiling of growth.

Additionally, structural problems had emerged in the architecture—an Oracle-centric configuration, lack of Read/Write separation, and inadequate index design that did not anticipate load distribution. Modifying the database of a running service was highly difficult, and the company faced a situation where fundamental resolution was impossible without internalizing the technology.

In May 2006, Susumu Fujita announced the commencement of in-house engineer recruitment on his own blog, declaring '20 hires by the end of June.' This was a policy to internalize development capabilities and increase the speed of system improvements, breaking free from outsourcing dependence. Measures to strengthen recruitment were executed, including office renovation, compensation improvements, and CEO attendance at final interviews.

That same year, Makoto Sato joined the company and earned trust through handling first-response incident management. Over three years, he rebuilt the load-balancing architecture. The migration from Oracle to MySQL was executed, along with static asset separation and index optimization. The company pivoted toward building infrastructure capable of withstanding surging traffic.

Infrastructure improvements progressed incrementally, achieving stable operations around 2009. Outages during traffic spikes were dramatically reduced, and a structure emerged where PV growth could translate into revenue. With technical constraints relaxed, expansion of advertising inventory and revenue improvement progressed simultaneously.

In the fiscal year ending September 2010, the Ameba business achieved profitability. In addition to advertising revenue, a subscription model was also established, and it grew into a high-margin business. Furthermore, the success experience of internalizing technology spread across the organization, and a culture of engineering-first became embedded. The 2006 commencement of recruitment became the starting point for the company's transformation into a technology company.

Around 2010, internet usage was rapidly migrating to smartphones. CyberAgent had grown centered on advertising and blogs, but the PC-based business structure faced growing likelihood of being unable to maintain medium-to-long-term competitive advantage. Susumu Fujita advocated 'CyberAgent as a technology company' and made the shift toward engineering-led operations explicit.

Simultaneously, breaking free from sole dependence on advertising was also a challenge. Rather than an advertising model that scaled proportionally with headcount, a product-driven business that scaled was needed. The spread of smartphones meant expansion of the gaming and app markets, and this was recognized as an opportunity to establish new revenue sources.

In May 2011, the smartphone shift was declared and a company-wide organizational restructuring was executed. Cygames was established as a gaming subsidiary, and development of smartphone games was launched in earnest. 'Rage of Bahamut,' released in September 2011, became a hit both domestically and internationally, ranking highly on both Google Play and the App Store.

Additionally, in the advertising space, in-house investment in ad technology commenced. Starting with 'AMoAd,' a smartphone ad network, multiple operational tools were developed, and in 2013, an Ad Technology Division was established. The company transitioned to a structure with product development and advertising technology as twin engines, reconstructing the business portfolio around smartphones.

The results of the smartphone shift directly impacted business performance. Cygames continued to create hit titles, and the gaming business grew into a revenue pillar. In the advertising space, the expansion of programmatic advertising strengthened the revenue structure. The business portfolio pivoted from PC-dependent to smartphone-led.

As a result, record-high net income of 14.7 billion yen was achieved in fiscal 2015. The smartphone focus strategy was not mere trend-following but signified a structural transformation into a technology-led company. The 2011 declaration and organizational restructuring became the starting point for CyberAgent's transition into its second growth phase.

In 2003, CyberAgent established the subsidiary CA Capital to enter the FX business, later renamed CyberAgent FX. The trading system adopted an OEM arrangement from Gaitame.com, enabling market entry without in-house development. The strategy was to expand into the financial domain while suppressing technology investment.

The business steadily expanded its account base, growing into a high-margin business with revenue of 8 billion yen and operating profit of 3.2 billion yen in fiscal 2011. As a business generating stable profits outside advertising and media, it gained prominence and became a division symbolizing the company's revenue diversification.

However, from 2011 onward, the company was pursuing a smartphone-centric pivot, intensifying investment in gaming and ad technology. While the FX business was highly profitable, it had limited direct synergy with the smartphone strategy. From the perspective of concentrating management resources on growth areas, a review of the business portfolio was considered.

In January 2013, CyberAgent decided to sell its CyberAgent FX shares. The buyer was Yahoo Japan, and the transfer price was 21 billion yen. A gain on sale of 10.3 billion yen was recorded. The decision to divest a high-margin business was a choice that prioritized long-term strategy over short-term profit.

The sale secured a substantial cash position, bolstering the investment base for smartphone games and advertising technology. The business composition was more clearly organized around smartphones, and the consistency of management policy was strengthened. By exiting the non-core financial domain, the framework for concentrating resources on growth areas was put in place.

Meanwhile, Shinichi Saijo, who had led the business, departed the company and subsequently transitioned to venture investment. The sale of a high-margin business was accompanied by organizational change as well. The 2013 share sale became a symbolic decision demonstrating the management posture of thoroughgoing selection and concentration.

Around 2015, the spread of smartphones and the advancement of telecommunications infrastructure were making video viewing an everyday activity. Additionally, Netflix's entry into Japan confirmed that the expansion of the online video market was irreversible. CyberAgent had built its revenue foundation on advertising and gaming, but was considering entry into the video space as the next large-scale market.

At the same time, the company lacked expertise in program production, and solo entry had its limits. Susumu Fujita engaged in extensive discussions with TV Asahi, envisioning a concept that combined the internet's technological capabilities with a broadcaster's production capabilities. A joint venture format that complemented each party's strengths became the prerequisite for entering the video market.

In April 2015, AbemaTV was established as a joint venture with TV Asahi, with ownership split at 60% CyberAgent and 40% TV Asahi. A framework was constructed that maintained CyberAgent's initiative while incorporating broadcast content production capabilities. In April 2016, the service launched as a free, always-on broadcast-style video streaming service.

At launch, approximately 18 channels were programmed, covering diverse genres including news and anime. The structure entailed substantial costs for program production and content procurement, and the decision was made to commit to long-term investment premised on annual losses of hundreds of billions of yen. Susumu Fujita explicitly stated the policy of continuing investment for 10 years.

AbemaTV grew its cumulative downloads and commenced advertising sales, but the cost burden was heavy and the entity fell into negative equity. By 2022, negative equity reached 111.1 billion yen, indicating a substantial financial burden. The management decision prioritized market establishment over short-term profitability.

However, the gaming business's high profitability supported the investment base, and the company continued investing from its own funds. AbemaTV built a distinctive position in online video and formed the foundation for a media vision rivaling terrestrial broadcasters. The 2015 joint venture establishment became the starting point for the company's long-term strategy of aspiring to become a next-generation media company.