Japan Metaverse Market (2024 - 2030)

Japan Metaverse Market Size & Trends

The Japan metaverse market size was estimated at USD 4.06 billion in 2023 and is expected to grow at a CAGR of 48.2% from 2024 to 2030. Technological advancements, the rising integration of the virtual world with the real world, and the high acceptability of innovations by locals are some of the key factors driving the growth of the metaverse market in Japan.

With the advent of technology, the digital world is becoming more tangible through augmented reality (AR), virtual reality (VR) and mixed reality (MR). Artificial Intelligence (AI) is increasingly easing the processing and computation needed to create seamless combined worlds. R&D in networking and communication further promotes the unification of technologies, giving humans a new way of interacting with their environment. Moreover, the advancements in NFTs, blockchain, and generative AI are increasing security and data privacy while improving the applications of the metaverse. Overall, these are accelerating the growth of the metaverse market.

Japan is known for its numerous innovations. Its Society 5.0 initiative aims to create a smart Japan through internet-of-things (IoT) applications and the adoption of 5th-generation wireless technology, bringing cyberspace closer to physical space and conveying new value to society and industry. This initiative is anticipated to drive the Japan metaverse industry’s growth.

Metaverse technology has developed further due to the COVID-19 pandemic, and it is anticipated that there will be a significant increase in customer interest post-pandemic. As a result of lockdowns and closures, the pandemic has hastened the creation of virtual online communities that have become essential lifestyle domains for people. It has included the growth of interactive game landscapes and increased mixed reality usage. The COVID-19 pandemic has had a favorable impact on the market and has the potential to benefit numerous industries. The increasing popularity of the metaverse has been further boosted by the appearance of digital assets, blockchain technology, and Non-Fungible Tokens (NFTs).

Market Concentration & Characteristics

The market growth stage is high, and the pace of growth is accelerating. The Japan metaverse market is characterized by an active and rapidly evolving landscape driven by technological advancements, diverse applications, and a supportive ecosystem. One prominent feature is the increasing adoption of metaverse across various industries, including digital marketing, finance, entertainment, and more. The demand for innovative solutions in the gaming industry, such as immersive and interactive gameplay, boosted significant growth in the region.

In June 2022, the Japanese government launched the Intellectual Property Promotion Plan 2022, emphasizing the need to adapt to emerging technologies such as NFTs, metaverse, and generative AIs. The plan includes developing guidelines to address content-related and legal challenges. The Ministry of Internal Affairs and Communications introduced a study group in August 2022, which released a report in July 2023, defining the metaverse as a virtual digital environment accessible through the internet.

Anime, Japanese animation videos, is one of Japan's most widely consumed forms of content. It has a strong fan following and holds a high cultural value. Moreover, there is a high demand for video games in Japan. In 2022, the Japanese game industry generated USD 9.1 billion, with 64% of the gaming population between the ages of 20 and 49. Anime and gaming are increasingly finding applications in the metaverse, further promoting the market's growth.

Product Insights

The software segment accounted for the largest revenue share of 42.7% in 2023 and is expected to continue to dominate the industry over the forecast period. The software enable the creation, development, and operation of virtual environments and experiences. The need for virtual environment development, social networking and communication, and content creation and distribution are driving market growth.

The service segment is anticipated to grow the fastest during the forecast period. The increasing demand for virtual events, experiences, marketing, and advertising is driving the market growth. The service segment plays a vital role in providing a range of offerings that enhance user experiences, support virtual interactions, and drive engagement within virtual environments. Services in the metaverse market encompass a variety of activities and solutions that cater to the needs of users, content creators, businesses, and organizations operating within the metaverse ecosystem.

Platform Insights

The desktop segment held the largest revenue share in 2023. Desktop computers are crucial for users to engage with the metaverse, create content, and connect with others in virtual spaces. The Japanese metaverse market's desktop segment is characterized by a diverse range of high-performance computers, gaming PCs, and workstations, providing the necessary processing power, graphics capabilities, and connectivity to support demanding applications and experiences within virtual environments. These devices are the driving force behind the market's growth.

Foreign companies are expanding into the Japan metaverse market to cater to the rising needs of powerful platforms. For instance, in December 2023, Nvidia announced its commitment to prioritizing Japan in distributing its GPUs to support Japan's AI industry, which is expected to enhance the functionality of the metaverse. This strategic move aligns with discussions with the Japanese government and aims to catalyze a transformative era in robotics and AI. Notably, major technology players in Japan, including NTT, Sakura Internet, NEC, and Softbank, collaborate with Nvidia to develop AI solutions and establish AI-driven data centers.

On the other hand, the mobile segment is expected to witness the fastest growth during the forecast period. The proliferation of mobile devices, including smartphones and tablets, has provided users with a convenient means of engaging with the metaverse ecosystem, connecting with others, and exploring virtual worlds anytime and anywhere. The continued growth of the smartphone market has led to the development of increasingly powerful devices, further driving the growth of metaverse market.

Technology Insights

Based on technology, the market is segmented into blockchain, VR & AR, mixed reality, and others. The VR & AR segment accounted for the largest revenue share in 2023. VR and AR technologies are vital in creating immersive and interactive virtual environments. These technologies allow users to engage with digital content, explore virtual worlds, and interact with others more engagingly and realistically.

The mixed reality segment is expected to grow fastest during the forecast period. Mixed Reality (MR) refers to integrating the physical and digital worlds to construct immersive and interactive user experiences. Mixed reality encompasses elements of both VR & AR, enabling users to engage with digital content in real-world settings or within virtual spaces. The need for a highly immersive experience is driving the growth of this segment. Multinational companies are developing devices to meet the growing demands in Japan. The launch of Apple’s Vision Pro in February 2024 solidified Apple’s first step in the mixed reality segment with capabilities of combining AR and VR seamlessly.

Application Insights

The content creation and social media segment dominated the market in 2023 and is projected to grow at a significant CAGR during the forecast period. The increasing demand for interactive content, immersive experiences, and social interactions within virtual environments drives the growth of this segment. According to OOSGA, in 2023, Japan had 81% of the population engaged in social media communicating, sharing, and consuming content.

The digital marketing segment is expected to witness the fastest growth over the forecast period, owing to the increasing perks and reach of in-game advertisements and virtual events. By leveraging the metaverse’s capabilities, companies can reach audiences in an interactive and immersive way digitally. Combining this ability with AI will help personalize the advertisements.

End-user Insights

The BFSI segment dominated the market in 2023 and is projected to grow at a significant CAGR over the forecast period. This growth can be attributed to the rise of virtual banking services and immersive customer experience. Japanese banks are exploring virtual banking services within the metaverse, allowing customers to access accounts, conduct transactions, receive financial advice, and engage with virtual tellers in immersive digital environments. Virtual banking experiences provide users convenient and interactive ways to manage their finances and access banking services.

The tourism and hospitality segment is anticipated to witness rapid growth from 2024 to 2030, driven by the emergence of virtual travel and hotel and accommodation tours. People can travel digitally to different places without getting out of their homes. The photorealistic videos, images, and audio, coupled with the freedom to view anything from any vantage point without having to spend time traveling, are one of the key appeals promoting this segment.

Key Japan Metaverse Company Insights

Some of the key market players includeSony Group Corporation; NTT DOCOMO; Cluster, Inc.; and HIKKY Co., Ltd.

• Sony Group Corporation is a company focused on various technologies such as VR headsets (PlayStation VR2), game development, and entertainment production, contributing to the metaverse ecosystem. Over the years, the company has been exploring the metaverse ecosystem by engaging in partnerships and merger and acquisition activities. For instance, in January 2023, Sony and Manchester City collaborated to build a metaverse for fans to interact and participate in virtual activities.

• NTT Docomo, Inc. is Japan's major telecommunications provider and mobile phone operator. The company actively invests in 5G infrastructure and VR/AR experiences for consumers and businesses. For instance, in November 2022, the company collaborated with SK Telecom Co., Ltd., a South Korea-based telecommunications company, on advancements in digital media, 5G/6G, and the metaverse.

• Bandai Namco Entertainment Inc. is an iconic gaming company entering the metaverse with virtual spaces, avatar creation, and integrating game franchises with metaverse experiences.

• Styly, Inc. is the developer of STYLY, a platform for creating and sharing virtual fashion items and avatars across various metaverse platforms.

Recent Developments

• In January 2024, Sony Corporation introduced an immersive three-dimensional content conception system. The system features a head-mounted XR display with OLED 4K resolution microdisplays and a see-through video function. It includes optimized controllers for precision pointing and intuitive interaction with 3D objects. Sony plans to collaborate with three-dimensional software developers from the industrial design and entertainment sectors. Siemens will exclusively partner with Sony to introduce a new solution for immersive design and collaborative product engineering.

• In October 2023, HIKKY introduced the Para-real World Project, intending to make Para-real Cities freely accessible to anyone. HIKKY, a VR development solutions provider, including the VR event Virtual Market, plans to develop a metaverse consisting of 100 cities globally within five years.

• In January 2023, KINGBEAT, a fashion developer, and Realize Mobile, a subsidiary of SoftBank Corp., partnered to launch Fashion Tech Tokoyo. This service combines digital volumetric capture and fashion creation technology to create three-dimensional (3D) digital fashion for AR, VR, and the metaverse. The service provides high visual detail by simulating clothing wrinkles, motions, and textures, allowing for the creation of unique retail products and the transformation of digital items into NFTs for in-store purchases.

• In October 2022, NTT Docomo, a telecommunications operator in Japan, launched a new division known as Qonoq. It will focus on developing software and hardware solutions for integrating extended reality products for its customers. This division comprises 200 employees and is dedicated to researching and developing new technologies that will enhance the metaverse experience for NTT Docomo's users. The division's objective is to provide cutting-edge solutions that will enable the integration of extended reality products into the company's existing offerings, thereby enhancing customer experiences.

Japan Metaverse Market