The Future of the Metaverse

■ The Future of the Metaverse

 At the Kyoto Smart City Expo 2022, we discussed "The Future of the Metaverse" with Naoto Kato, CEO of Cluster.

Cluster is Japan's largest metaverse platform and holds the global record for hosting virtual events.

　It has hosted various events, including Virtual Shibuya’s Halloween, the M1 Grand Prix in Virtual Osaka, and events for Disney and Pokémon. Moreover, users are rapidly creating their own spaces, starting businesses, and opening shops within this virtual landscape.

Physical digitization begins with gaming, where real spaces are being replaced by virtual equivalents. However, not everything will be replaced; the real world will remain as a "luxury" that destructs the environment.

Web3 and the metaverse are "unrelated." Their rise in popularity merely coincides.

Meta represents the ideology of computers being liberated from the physical form, with VR as its technology.

Web3 embodies the ideology of decentralization, with blockchain as its technology.

Factors that will further propel the metaverse include pandemics, wars, and aging populations. It has advanced due to COVID-19, and wars will continue to accelerate its development. Aging will increase the number of recluses engaging in the metaverse.

The metaverse is still based on classical mechanics. It can transcend physical laws, allowing for the manipulation of spaces, exceeding the speed of light, and the creation of non-existent worlds. It allows for the creation of entire universes.

Japan's strengths in this realm include:

1. Rich IP, and a deep history and culture.

2. Unique perspectives on physical forms and characters, such as the "cute" aesthetic and a profound understanding of anime.

3. A vast number of creators, supported by national characteristics and educational foundations.

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Oshi Economy

■ Oshi Economy

"Oshi Economy" by Juno Nakayama explores how the act of supporting one's favorite idols, artists, and characters—known as "Oshi activities"—has created a dynamic economic sphere.

Fans purchase multiple items of merchandise and works related to their beloved personalities or characters. They attend performances and concerts. They dance. They cheer. Spending their last dime and their time, this consumption and expression becomes their passion and purpose.

"Oshi activities" have transcended gender and age, even being nominated for the New Words and Buzzwords Award in 2021.

The term "Otaku" has been recognized since the 1980s and often carried a negative connotation of introversion. The word "moe," which became popular in the 1990s to express affection for idols and characters, is also introspective.

However, the 2000s saw a new wave of fans who are active and extroverted, dedicating their lives to their oshi with pride.

Oshi activities are driven by digital interactions. While engaging with content, participants also express themselves to others using smartphones, blogs, and social media. This marks a departure from the fan culture of the Showa and Heisei eras. It's not about monopolizing one's favorite things but about encouraging and inviting widespread empathy and sharing.

Fan groups are not rivals but allies. They appreciate their interests actively and share their experiences both in reality and digitally.

This trend could not only redefine future entertainment consumption but also evolve into a significant lifestyle layer.

The battlefront for content has moved to online consumption, alongside the expansion of live experiential businesses. Moreover, the merchandising of content is a significant business, with anime’s derivative business sometimes generating more than twenty times the production costs.

For artists and writers elevated by their fans, the content itself is important, but so is interaction with fans. Enhancing community engagement and shaping the brand are the business’s backbone.

In the U.S., the content industry has consolidated into major groups like Disney and Warner. Chinese capital, like Tencent, is also making global strides, posing a challenge for Japanese firms.

However, in the fields of anime and gaming, Japan possesses a rich array of internationally competitive characters. Utilizing these assets, Japanese companies could potentially craft strategies that deeply engage fans.

South Korea serves as a model. K-POP has solidified its standing in the West. Films and dramas like "Parasite" and "Itaewon Class" have surpassed Japan’s international visibility, a testament to a concerted intellectual property strategy driven by both government and private sectors.

Particularly, the fan strategy of "BTS" is well-known. They've not only won fans in English-speaking countries through SNS but also maintained a friendly, bidirectional communication.

The lockdowns during the coronavirus pandemic increased digital content consumption.

The fervor for live events is rebounding.

Communities buzzing with vibrant interactions centered on their Oshi are forming.

A new galaxy of both digital and live entertainment is emerging.

 

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The Future Predicted by Technology

■ The Future Predicted by Technology

Joichi Ito's book, "The Future Predicted by Technology."

Born in Kyoto, Joi has held positions at the MIT Media Lab and earned a doctorate from Keio University; he is now president of Chiba Institute of Technology. Despite being younger, Joi has many similarities with me and is far ahead, discussing web3 with respect.

Here are some key points from his book that I found noteworthy:

・Lower Layer Focus

In web1-2, the application layer attracted financial investment. In web3, the focus shifts to the protocol layer.

The protocols for web1-2 were HTTP, and the apps were GAFA.

For web3, the protocols are Bitcoin and Ethereum.

-- Web3 is tech-oriented and user-centric, allowing users to escape platform monopolization and cross barriers.

・Participation

Web1 was about reading, web2 about writing, and web3 is about participating.

-- The book highlights the potential of DAOs. I share a deep interest in this area.

Participation requires "contribution," similar to the way everyone contributed to developing Hatsune Miku through singing and dancing.

・Project-based Work

Through DAOs, management and organizational structures transition to project-based work using tokens.

Hierarchies collapse, leading to wealth redistribution.

-- In my "Creating a Super Leisure Society," I argued that people would spread their time across multiple jobs, and the distribution of wealth generated by machines becomes critical. Web3 might provide a solution

・Fandom

NFTs extend beyond art and games to include uses in religion, such as verifying the authenticity of relics, becoming a vital tool for building fan communities.

-- The fandom-based "push economy" will become a core strategy in entertainment, supported by web3.

・Individual-centric Approach

Even individuals who struggle with communication can thrive in the metaverse.

In web3, individuals navigate across platforms, engaging through their own identities.

-- The empowerment and liberation of individuals, free from enclosures, are fundamental to web3.

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How to Handle Digital Trust

 ■ How to Handle Digital Trust

I participated as a speaker at the "World Digital Conference" organized by Nikkei.

Theme: Why is Digital Trust Necessary?

I first spoke at the World Digital Summit in 1999, during my time at the MIT Media Lab, after leaving Kasumigaseki. Although the digital climate was energized then, by the following year, the eJapan initiative presented by the government was still grappling with the two major challenges of education and informatization of administration—challenges that persisted even twenty years later in the policy agenda. The pandemic made us aware of our digital shortcomings.

The government has introduced strategies to promote data usage.

From the private sector perspective, the Super Education Association, which I am involved with, has been making recommendations on establishing data usage guidelines.

Although it took a decade to integrate PCs and other digital tools, leveraging data might take another decade. A collaborative effort involving industry, government, and academia is necessary.

Japan's overall Digital Transformation (DX) effort is somewhat precarious.

While the government has established a Digital Agency to focus on administrative DX, the incident in Yamaguchi Prefecture, where COVID-19 relief funds were mistakenly distributed, revealed that offices and banks were still exchanging data using floppy disks—not via the internet, cloud, AI, or Web3, highlighting the reality of Japan's digital landscape. Before we can fully embrace DX, there are more fundamental issues to address.

Q: What new challenges have arisen from advancements in DX within the educational sector?

A: An environment for utilizing data has been established, but the predominant feeling is one of anxiety, which has not been sufficiently countered by visible benefits. The introduction of PCs and digital textbooks was initially met with similar apprehensions. Demonstrating tangible outcomes, like children enjoying learning and improving academically, was crucial. The same principle applies to data.

Q: What are the issues with misinformation during events like the Ukraine invasion and the US presidential elections?

A: There are three key approaches: regulatory, technological, and educational, all of which require comprehensive planning. From a regulatory perspective, while the US lets GAFA handle data management, China maintains state control, and the EU employs a unified legal framework. Japan must decide which direction to align with. Technologically, solutions like AI filtering and digital distribution infrastructures are available. Beyond technology, enhancing literacy education is essential to develop the ability to discern the reliability of information and data and to foster proper digital engagement.

A: What role should governments and media play?

Q: The tasks are numerous, including establishing rules, developing technology, and educating. However, the first step for the government should be to embrace data usage themselves, beginning with simple measures like discontinuing the use of faxes and promoting open data to enable private sector usage.

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Maybe Lose the Fax Machines before Talking about DX??

■ Maybe Lose the Fax Machines before Talking about DX??

At the Digital Nation Japan Forum, I took the stage in a segment on the development of regional DX talent.  

The shortage of IT talent has gone unresolved for 20 years, with 40% of user companies facing shortages. At the same time, transitions from IT company to user company are only increasing. A sense of crisis is emerging in industry, which I view as a positive movement.

iU opened its doors to nurture DX talent. As conventional classroom learning would be ineffective, it is being built together with companies.

Practice trumps knowledge, so all participants learn while engaging in internships or entrepreneurship.

This is but a small-scale model. The intent is to expand such actions in collaboration with numerous schools.

Materials by the Ministry of Internal Affairs and Communications point out four sectors in which Japan's IT utilization lags that overseas: government administration, healthcare, education, and management.　

The problems here are bureaucrats, doctors, teachers, and CEOs.

The problems lie more at the top levels than the bottom levels. Without change at the top, solutions are impossible. Government offices, hospitals, schools, and CEOs must be made to use digital technologies.

In industry-government-academic cooperation in the digital field, academia is the problem. A great gap divides industry and academia in Japan.

To date, the central government bureaucracy has shouldered platform functions in Japan.

The government took the lead in bringing together and guiding companies, in a style that has now reached its end. The role that academia should play is a significant one. The nation's universities should be mobilized.

In the collaboration between the city of Kyotango and iU, universities essentially serve as consultants to collaborate with relevant companies, promote regional government DX, and engage in education for high school students in the city. This is government-industry-academic collaboration at the local level.

Inquiries are coming in from other local governments, seeking advice on setting up similar frameworks.

Such initiatives could be advanced in collaboration with universities in many regions.

And yet.

There is a village in Yamaguchi Prefecture that mistakenly made transfers for 46.3 million yen. The transactions involved the floppy disks that are used by the village on an everyday basis.

That's what "digital" meant for them. Government offices and banks. The leaders in regions.

We talk about DX, but before that, let's use the Internet the way it is normally used.

Let's ditch the fax machines and introduce telework. We can start with these simple things.

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