Bringing Your VR/MR/AR Company to Japan: What to Know in 2024

Interest in virtual reality and mixed reality is growing, providing a ready backdrop for those considering bringing their VR/MR/AR company to Japan. 

Mixed reality, a combination of virtual reality and augmented reality, has seen particular growth of late. Due partly to Japanese companies and corporations looking for staffing solutions to workers asked to work from home and other safety measures instituted in factories to reduce coronavirus spread.

In one example of mixed reality rising to meet the need, Microsoft's HoloLens is being deployed by major Japanese factories to teach complex procedures since travel has become restricted. 

Japan's current VR market and upcoming trends

According to Nikkei Asia, from Yano Research Institute’s stats, the Japanese market for VR/AR devices and software was worth 395.1 billion yen ($3.72 billion) in 2019. This category's market is expected to expand to 1.2 trillion yen by 2025 with the spread of 5G.

Naturally, online gaming and mobile gaming are two industries with expected growth projections. Yet, new applications of virtual reality, augmented reality, and mixed reality are where investors and entrepreneurs are turning their gaze in Japan. For instance, the Japanese softball team—ahead of the upcoming summer Olympics—is training using VR headsets, batting and pitching using real imagery and stats of known opponents.

Commerce and tourism are two additional sectors in which VR/MR/AR is expected to grow. Travel in 2020 stalled over pandemic concerns, during which time many travel agencies and museums in Japan renewed their focus on providing VR tours to offset loss as well as stay visible while they wait for travel restrictions to lift. Rock stars, too, were looking for ways to bring the concert experience into people's homes, and mixed reality came closest to the real thing, as reported by The Verge, covering Japanese rock star Miyavi's Virtual Project.  

However, the high cost of virtual reality and mixed reality hardware and developing accompanying software and contents have been key obstacles to market growth in Japan. Conversely, with demand increasing and fewer direct competitors than in the US or China, Japan provides a unique opportunity for VR/MR/AR companies looking for global growth opportunities. 

Governmental support and subsidies for VR/AR in Japan

Setting up your VR/MR/AR company in Japan will not be without challenges. To smooth the way, Japan's External Trade Organization (JETRO), an independent branch of the Ministry of Economy, Trade and Industry, supports businesses looking to expand to Japan. Their assistance includes temporary free office space and free consultations on procedural requirements, regulations, and possible subsidy programs for which you may be eligible. 

JETRO's successful case study of a VR company penetrating the Japanese market is that of Zhongqu Technology Co., Ltd., a company that manufactures and sells 3D VR cameras and offers 3D image scanning services. JETRO helped the VR business successfully set up their Japanese subsidiary company 3DNext Inc, in 2018, assisting them with temporary office space and referring them to local service providers (tax accountants and certified legal specialists for visa applications and banks).

Aside from JETRO's free counseling sessions and temporary office space, the Japanese government also offers many subsidy programs you can apply to once you have registered your business in Japan. 

For instance, Mirai Innovation Tokyo (Japanese program title: 未来を拓くイノベーションTOKYOプロジェクト) is a subsidy program developed by the Tokyo government in 2018 to help support venture companies and Japanese startups that wish to develop and make sellable a new product in the fields of AI, robotics, information and communication (ICT, IoT), transportation, energy, agriculture, safety, healthcare, and manufacturing. The subsidy rate is 1/2 of capital investment with the upper limit of 500 million yen. The recruitment session for Mirai Innovation Tokyo is currently closed, but there are many others.

For small and medium-sized companies, the government's manufacturing subsidy (Japanese website) supports capital investment by small and medium-sized enterprises to develop innovative services, prototypes, and improve production processes. The subsidy rate is from 1/2 to 1/3, with a 1-to-10-million-yen upper limit. (See MailMate's "2020's Subsidies to Support and Expand Your Business in Japan" for an overview of the types of subsidy programs available once you have legally established yourself here.) Also, if you represent an enterprise-sized company, there are various tax breaks for which you may be eligible.

Furthermore, the government regularly runs subsidies and grants for particular industry sectors. If you are developing VR/AR software for a specific industry, you might be able to apply for more than one type of grant/subsidy program. 

On the consumer side, the Japanese government has implemented subsidy programs available to domestic companies, allowing them to subsidize the cost of purchasing software and hardware to improve business productivity. In other words, Japanese companies are being incentivized to improve their workspaces and operating techniques, which VR/AR hardware, software, and contents are perfectly suited to supply.