One of the hottest product categories this year is that of electronic readers, including the explosion of business in the form of electronic books and other digitally published materials.

Looking at the e-book market alone, the industry in Japan experienced annual sales increases of 30% and 10% in fiscal 2008 and fiscal 2009, with sales expected to reach 130 billion yen by fiscal 2014 (up 130% over fiscal 2009). A large portion of initial sales was for "e-books for cell phones," with the popularity of manga comic books driving market expansion. However, all that is set to change with e-readers now reaching greater saturation, and with content being marketed not only for e-readers but also new breeds of devices, including smartphones.

Although the boom has been gather momentum since Amazon.com Inc. of the U.S. rolled out its original Kindle portable e-reader less than three years ago, critical mass was apparently reached this year with the wildly successful introduction of U.S.-based Apple Inc.’s iPad tablet computer. Some even guesstimate that the iPad has cornered in excess of 20% of the global e-book market.

As the old saying goes, "where there’s smoke there’s fire," and competition has been heating up dramatically. A price war has broken out among lower-end e-readers, with Amazon having recently rolled out a new, cheaper "mass market" version of the Kindle. Meanwhile, early e-reader pioneer Sony Corp. has slashed prices on its Reader Daily Edition e-reader, and Toshiba Corp. and Sharp Corp. are both introducing new e-readers.

Just as telling is the strong "new" demand for content. This is especially true for Japan, where the publishing industry has been slow to implement strategies to address the encroachment of the digital world and their own slowly eroding business. Japanese sales of paper books and magazines fell 4.1% to a 21-year low in 2009, shrinking roughly 27% since a 1996 peak, according to the Research Institute for Publications.

The good news is that in a very short period of time, we are seeing aggressive tie-ups that demonstrate new modes of cooperation – both in the newer digital publishing world as well as the traditional publishing world. For example, as early as the fall, Dai Nippon Printing Co. will enter the e-books sales business by joining forces with bookstore chain subsidiaries to launch "Japan’s largest store for e-books" via a Web site. The electronic bookstore would boast a collection of about 100,000 books from a variety of publishers, and be viewable on the iPad as well as via mobile phones and personal computers.

Using its BookGate service, midsize printing firm Kosaido Co. has already begun distributing e-books for the iPad and iPhone via Apple’s App Store, offering titles from 51 publishers including Magazine House Ltd., Asahi Shimbun Publications Inc. and PHP Institute Inc. Kosaido aims to court more publishers and offer 300 titles by fall 2010.

A consortium of four companies (Sony, Toppan Printing Co., KDDI Corp. and Asahi Shimbun Co.) have established a new company to distribute e-books, including manga and periodicals, and deliver them to the reading public starting around November. And Google Inc. of the U.S. will reportedly debut its "e-bookstore" in Japan in early 2011.

There can be no doubt that the way consumers are interacting with written materials is about to take a quantum leap forward. Indeed, digital media offers a brave new world of communications opportunities, including rotatable images, embedded video and audio, and linking opportunities to name a few. Leveraging these new digital communications channels in content and advertising should be a top priority of all companies, regardless of category.