Approaching the "Metaverse" ~ Exploring New Business Opportunities Realized by Virtual Spaces ~

The term "metaverse" seems to have rapidly gained traction as a tech buzzword lately, but many business professionals likely don't truly understand what it actually is. The number of people who "regularly enjoy metaverse spaces" is probably even smaller.

In this article, we interviewed Mr . Shin Kanbayashi of Dentsu Inc. to explore what the metaverse truly is and what changes it could bring to our lives and businesses. While Mr. Kanbayashi regularly conducts corporate study sessions, he shared insights that go beyond textbook information—discussing the "future of the metaverse" as he faces it directly in the business world.

The "metaverse" is a virtual space premised on communication with others

Q. In May 2022, Dentsu Inc. Japan Network's cross-organizationalunit "XRX STUDIO" formed a specialized team to leverage metaverse-related knowledge for corporate support, launching its "Integrated Metaverse Solution" (release article here). Mr. Kanbayashi, you are one of the core members of this "XRX STUDIO" and have extensive experience in metaverse-related projects. First, could you tell us about your involvement with the "metaverse"?

Kanbayashi: My involvement with what is now called the metaverse began around 2013. Back then, I started working with AR (Augmented Reality) and VR (Virtual Reality), and I also have experience winning awards in the Media category at the Cannes Lions International Festival of Creativity (formerly known as the Cannes Lions International Advertising Festival), the world's largest advertising and communications awards. Starting in 2016, I was involved in forming a cross-functional organization within Dentsu Inc. called "Dentsu VR Plus," which allowed me to take on VR projects across departments. Then came the COVID-19 pandemic, which reignited interest in AR and VR and gave rise to the buzzword "metaverse." Consequently, in 2021, I helped launch "XRX STUDIO," a cross-organizational unit within the Dentsu Inc. Japan Network, in collaboration with five domestic Dentsu Group companies.

This "XRX STUDIO" was created as a team that provides integrated, one-stop services—from business concept development to marketing solution creation, UI/UX development, operations, and PDCA—all leveraging XR technology (a collective term for technologies like VR, AR, and MR that fuse the virtual and real worlds). In other words, it considers "what kind of customer experiences can be created using the metaverse," translates that into a business concept, materializes that concept, and handles everything consistently from post-launch operations to PDCA. As a member of this team involved in various projects, we have accumulated considerable expertise in the metaverse domain. Simultaneously, the term "metaverse" has become more widespread, leading to an increase in inquiries to Dentsu Inc.

Q. Let's start with the basics: What exactly is the metaverse?

Kanbayashi: What is the metaverse? Since I currently conduct many corporate study sessions, that question is often the starting point.

Generally speaking, the metaverse is "multiple realities overlapping with the real world" or "a space where the real world undergoes digital transformation." A clear example is "virtual space." Users enter this space through their own avatars. For definition, the "Seven Requirements for the Metaverse"outlined by investor Matthew Ball in his 2020 blog post are well-known.

When we talk about virtual spaces, they've been used in games and other applications for some time now; they are by no means "future technology." For instance, games that became huge hits during the pandemic—like those where players interact while developing a deserted island, or battle royale games set in worlds built by players—can already be considered "metaverse spaces." Personally, I believe humans have a fundamental desire to escape reality somewhere. When travel and live events became impossible during the pandemic, these games likely expanded rapidly as "escape destinations." The reason these technologies, already established in gaming, suddenly gained attention as "the technology of the future" was likely significantly influenced by Facebook's announcement on October 28, 2021, that it would change its name to "Meta" and declare, "We are now a metaverse company."

Looking at the metaverse through the lens of "how Gen Z uses it," I believe its importance lies in being a "shared spatial service utilizing technologies like AR and VR." In other words, it's not merely a "fun digital space."

The key point is "the ability to communicate with others within it." Once you enter the space, other people's avatars are there, and the ability to engage in various forms of communication with those avatars is crucial. Some people refer to the metaverse as a "3D internet." While this isn't an entirely accurate description, the intent behind the phrase is clear. It emphasizes that "being a communication platform is what matters."

Where communication happens, new business opportunities emerge

Q. We hear inquiries about the metaverse are increasing from many companies. Why is the metaverse attracting so much attention?

Kanbayashi: As I mentioned earlier, the metaverse is a place where new forms of communication unfold within a virtual space. Therefore, companies must explore what exactly they can do there. We receive many requests from companies wanting to explore new business opportunities emerging within the metaverse space.

The technology for metaverse-related devices is also advancing. While you can currently experience it on PCs or smartphones, the day may come when these are entirely replaced by head-mounted displays. Some devices even overlay images onto the scenery you're currently seeing. I believe the possibilities will expand further with such hardware advancements, so it's crucial to explore potential while keeping an eye on these technological evolutions.

Numerous companies have already begun moving forward, with apparel brands notably aggressive in their expansion. One sports brand has created a space within the metaverse akin to a mini-game park. There, anyone can create and upload their own games to play. Users can earn points by enjoying games in this space, which can then be redeemed for the brand's merchandise. Additionally, digital goods are sold within this same space.

Since avatars are essentially extensions of ourselves, users place significant importance on having visually rich avatars when interacting with friends. This makes fashion a viable business within the metaverse.

Simultaneously, for this brand, getting many people to visit and play in the space through games, and having them spend time there, leads to strengthened engagement. Furthermore, if games created by users in that space become popular, "star creators" could potentially emerge from there. This naturally allows the brand to position itself as supporting creator development, boosting its reputation with the public as "That brand really is COOL."

Alternatively, there are developments unique to the metaverse. For example, a luxury brand might find it difficult for everyone to physically visit a store and experience its worldview. However, in the metaverse, the brand can create its own super-luxurious worldview and make it accessible for anyone to experience. Furthermore, it becomes possible to embody and offer experiences that represent the brand concept itself—things like "tasting something in outer space" or "standing in an overwhelmingly beautiful flower field and seeing a breathtaking view beyond," experiences that are impossible in reality but represent the ideal space the brand wants to provide. In the metaverse, even fantasy worlds can become reality.

Considering what new experiences can be created in the metaverse

Q. I see. I was wondering just how much potential a "virtual space" holds, but depending on the situation and purpose, it could indeed provide experiences surpassing reality.

Kanbayashi: Exactly. To reiterate, the crucial point is that the metaverse involves "communication with others." It's not just about what's enjoyable to see or visit; it's about the diverse interactions that emerge there. That's why it doesn't remain confined to individual hobbies, but opens up a wide range of possibilities.

Earlier, I mentioned "star creators emerging" within the metaverse. This means "new professions" are beginning to form there. In fact, businesses are starting to take shape around creating and selling fashion items and furniture for use within the metaverse, and ultimately, selling avatars themselves. In reality, people already make various efforts to become their ideal selves, like dressing stylishly or doing makeup. If this happens in a virtual space, wouldn't the desire to become an "ideal self" different from reality only intensify?

Other recent examples include "metaverse photographers," "metaverse travel agencies," and "metaverse directors." It's possible that most professions existing in the real world will also have demand in the metaverse. Therefore, I believe it's crucial to grasp the potential of what could happen in metaverse spaces now and proactively prepare for what we can achieve within them. Especially considering Generation Z, it might even be easier to establish connections through popular games and other metaverse platforms than through the physical world.

On the other hand, we must not forget that "the metaverse is merely a means to an end." While it certainly has the potential to become one of the communication platforms of the future, where we must forge new relationships with customers, for companies, it remains just one initiative among many. What's crucial is considering the fundamental value we want to provide to customers and how to realize that within the metaverse. We at XRX STUDIO, myself included, are here to support you in this journey. We'll work alongside your company, thinking together about how best to integrate the metaverse into your future business and corporate activities.

Many may have viewed the metaverse as "a game-like 3D space," but the idea that "the metaverse is defined by communication with others" offers a significant clue to understanding it. Essentially, leveraging the metaverse means providing new forms of communication and customer experiences not possible in the real world, and building new relationships from there. ( We also explain the customer experiences the metaverse brings in this article ).

For businesses, this means significantly broadening their target audience. Considering the need to connect with Generation Z in particular, the era where not utilizing the metaverse is simply not an option may be just around the corner. Why not consider how the metaverse could expand your own business?