Market Overview

The domestic Metaverse market size (total value of Metaverse platform, content, infrastructure, and XR devices such as VR, AR, and MR) is estimated at 186,300 million yen for FY2023. This is expected to grow to 275,000 million yen in FY2024, 147.6% of the market size of the previous fiscal year. Compared to FY2021 and FY2022, where enterprises rapidly accelerated digital transformation and entered the Metaverse market, the market experienced a temporary slowdown in FY2023.

At current, the domestic Metaverse market can be divided into two groups: those that have moved beyond the Proof of Concept (PoC) stage and are making strategic investments, and those that are withdrawing due to poor Return on Investment (ROI).
From FY2023 to FY2024, there has been active promotion of "Metaverse government offices" (services allowing users to access certain administrative services online) and local revitalization initiatives. In the industrial sector, specific use cases are emerging in areas such as education, retail, and entertainment. We believe the Metaverse has now reached a stage where its practical value is recognized in these particular fields.

Noteworthy Topics

Increase of Local Governments Utilizing Metaverse

Local governments are introducing Metaverse into public services, from the aspect of reducing gaps in the range and/or level of service provided between regions. The local governments envision public services to be more accessible by removing time and space restrictions with the use of Metaverse. Here are some examples of public services utilizing Metaverse:

<Education>
In areas with limited educational resources, such as depopulated areas and remote islands, online education through the Metaverse has emerged as a solution. By utilizing VR and 3D environments, students can access classes and specialized programs typically offered in urban areas, providing them with opportunities to receive an education comparable to those for their peers in urban areas. Additionally, local governments have introduced initiatives like Metaverse-based homeschooling, which supports students struggling with school anxiety or school avoidance.

<Medical Services>
In regions with limited medical resources, local governments are exploring the use of telemedicine and medical training through the Metaverse. By enabling doctors and healthcare professionals to provide consultations and care in a virtual environment, residents of underpopulated areas can access advanced medical services without the need to travel to urban centers. In addition, online training programs in the Metaverse allow medical professionals to enhance their skills, which is expected to improve the overall quality of healthcare in these regions.

<Tourism>
Some local governments have created virtual replicas of their tourist attractions in the Metaverse as part of efforts to boost the local economy. By offering virtual tours of these sites, they expand the reach of their tourism offerings, allowing people from urban areas and even international visitors to explore the attractions remotely. This virtual presence helps raise awareness of the town's appeal and plays a crucial role in encouraging virtual tourists to visit in person.

Future Outlook

Japan has relatively low usage of the Metaverse compared to the rest of the world. The Metaverse is not well recognized in rural areas or among elderly populations. As a result, industries related to the Metaverse view the domestic market as being in the early stages, or in a phase of disillusionment. A successful business model has yet to be established.
Given these circumstances, we believe market growth will not experience rapid inflation in the next few years. Instead, growth will be gradual, expanding from Metaverse applications designed for enterprises to those targeting consumers. This expansion will be supported by investments and research and development in peripheral technologies like AI.

However, over a longer timeframe of five years, the market is expected to see increased demand for the use of the Metaverse in combination with XR devices. While further development of AI technology will enhance the efficiency and sophistication of content creation, significant progress in XR devices is anticipated after FY2027. Based on this outlook, the domestic Metaverse market (as the total value of Metaverse platform, content, infrastructure, and XR devices) is forecasted to reach 1,870,000 million yen by FY2028.

Research Outline