In an Era When American Kids Play on Meta Quest, Can Japanese Social VR Win? An Interview with Masaru Ohnogi of Thirdverse

According to Ohnogi, while AI is the central topic in Silicon Valley, companies are also paying attention to "next-generation computing systems," and a battle for dominance is underway. Built on a foundation of AI, the display mechanism itself will shift from smartphones and PCs to glasses-type XR devices. With each company advancing its plans and development, Ohnogi positions Thirdverse as responsible for the entertainment that will run on top of those platforms.

When Iijima mentioned seeing an announcement that Apple would move away from large devices like the Vision Pro toward glasses, Ohnogi replied that the form factor will likely keep changing, but that, given their lightness and convenience compared with today's smartphones, the view that glasses will advance first is gaining ground in Silicon Valley as well. However, companies also understand that next-generation computing has two directions: casual use like a smartphone, and high-performance work like a PC. Ohnogi's assessment is therefore that things are progressing along two axes: everyday glasses that replace smartphones, and high-performance XR devices like the Vision Pro that replace PCs.

Ohnogi acknowledges that as a content provider, it is difficult because you inevitably depend on hardware makers and platforms. That said, broadly speaking, high-performance XR devices like the Vision Pro will center on VR, calling for immersive content. Smart glasses, on the other hand, use what is called AR, rendering 3D objects while you see the real world through the glasses, so the way entertainment is made changes significantly.

Ohnogi himself believes immersive experiences can offer a greater variety of experiences and are more rewarding for the company to build. In terms of device adoption, however, he expects inexpensive, highly convenient AR-centered devices to take the lead, and said that figuring out how to make entertainment for them will be a challenge for the company as well.

The title currently in development is a VR game called "Hello Kitty Skyland," licensed from Sanrio, in the "social VR" genre. Ohnogi cited changes in the VR game market since 2024 as the reason this genre is growing.

In the early days before 2023, users were mainly early adopters—in terms of age, men in their 30s and 40s, many of them gadget lovers. Content was also largely hardcore and sold as one-time purchases, and as experiences only possible in VR, there were many horror games and titles including depictions of bodies being torn apart. From 2024 onward, however, user demographics changed significantly and games themselves became more casual. Titles that are easy to play and centered on communication within them have become hugely popular, and that is the genre known as social VR, he explained.

When Iijima asked whether Roblox, which their seven-year-old son plays on a tablet, falls into that category, Ohnogi agreed. He offered a simple image: social VR is an evolved form of the kind of game where kids chat and play together noisily, done in a 360-degree world.

According to Ohnogi, some popular social VR titles in North America have surpassed 14 million installs on the VR version alone. In Japan, people tend to think "What's the deal with VR?", but in the US it is the kind of thing everyone at school is playing. He said he strongly feels the difference in enthusiasm every time he returns to Japan. As one reason for slow adoption in Japan, he cited the lack of content aimed at Japan, and he sees it as a device that is currently taking off in the US first.

The hardware in use is mainly the Meta Quest from Meta, formerly called Oculus. Citing 2024 data, Ohnogi said the Quest was the best-selling console device of the year on Amazon in the US, outselling the Nintendo Switch and others. Meta Quests are in homes in the same way that, in Japan, everyone has a Switch at home. Iijima responded that you don't get a sense of this in Japan, and Ohnogi said he feels that lag every time he comes back.

On the creators who are thriving in the US, Ohnogi explained that because VR games have low barriers to entry, almost all hit titles come from indie developers.

The epoch-making social VR title he named was "Gorilla Tag." Every player becomes a gorilla and plays "tag." Released at the end of 2022, it has been downloaded and played by more than 10 million people. According to Ohnogi, the game was made by a single creator over one year before release. "Animal Company," which became the next hit, was also made by three people. It is still easy for indies and startups to enter, and Ohnogi likened the situation to the early smartphone market. Iijima said they had mistakenly assumed that the 10 million downloads were for something released at scale by a large company.

The basic structure of a social VR game is that everyone first logs into a field called the "public lobby," communicates there, heads off to play the main game, and then comes back. In Gorilla Tag, a game of tag starts from everyone hanging out in the lobby.

Hello Kitty Skyland plans to offer several attractions, broadly divided into two elements. One is action-oriented play, and the other is play centered on fashion and dress-up. For the latter, he cited the large number of female fans that comes with the nature of the Hello Kitty IP.

The action side, to put it simply, will be play centered on racing, like Mario Kart. Here Ohnogi emphasized the distinctive locomotion system common to popular social VR games. In traditional console games you move your character with the controller's stick, but in social VR the players themselves are inside the game world, so they move by using their hands as if pushing off the ground. According to Ohnogi, this method has already become standard, and all of the social VR games mentioned earlier use hand-based movement.

Hello Kitty Skyland also introduces this hand-based movement for users who want to enjoy action, and is building races around it. There are mechanisms for accelerating, such as passing through rings floating in the air to speed up further. As an experience unique to VR, players can move up and down vertically on their own, giving a sense of floating, and he cited the fact that it is a completely different experience from 2D-screen games as a strength.

Ohnogi explained that because this is a social VR metaverse using Sanrio's IP, when you put on the headset and dive in, a dreamlike Sanrio world awaits, where you can communicate, enjoy attractions, and dress up. When Iijima asked whether there are features that make simply wandering around enjoyable, he mentioned an athletic area and small objects such as party crackers—things that let you communicate without talking. Through repeated beta tests, they have discovered various needs within the metaverse and are continually developing features to address them.

The supported devices are full headset-type VR rather than glasses, and the release is planned exclusively for Meta's Quest devices.

On how the Sanrio partnership came about, Ohnogi first explained that when the social VR genre emerged, the company started paying attention internally, and the idea of making a game in this genre came up. What they referred to then was the history of smartphone, console, and PC games.

When smartphones first appeared, many creators experimented to find out what kinds of games would catch on and developed experiences unique to smartphones. As an example, Ohnogi cited "Angry Birds," developed by Rovio of Finland—a game where you pull back and launch things like a slingshot—which spawned a string of similar games. Ultimately, however, the situation changed to one where IP titles almost monopolize the top-grossing smartphone rankings. According to Ohnogi, both PC and console games have historically followed a path where IP games come to dominate the market, and the company anticipated internally that the same would eventually happen with VR.

So they decided that, as their axis for competing in the newly emerging social VR space, they needed to bring in IP for differentiation in addition to offering new experiences, and they talked with various IP holders. Sanrio, for its part, had a change in management and wanted to focus on digital entertainment, and the fact that their interests aligned well led to the partnership. Ohnogi explained that of the many companies Thirdverse approached, Sanrio was the first to raise its hand.

On funding, when Iijima mentioned a total of 1.2 billion yen raised, Ohnogi added that the actual figure is higher, given circumstances such as the company having been split. He then stated that, according to the subtitles, "200 million yen" from the raised funds is being allocated as the budget needed for this project.

On monetization, Ohnogi again pointed to similarities with smartphone games. When smartphones first appeared, almost all games were paid downloads, but at some point they shifted to free-to-play, where playing is free and players make in-game purchases. The same thing is happening in VR, he said. Early VR games were almost all paid downloads, but today's social VR games are 100% free-to-play, using an in-game purchase model.

According to Ohnogi, the successful titles mentioned earlier have generated more than 10 billion yen in total revenue. With more than 1 million monthly active users, it has become a market that can generate that much revenue. Iijima responded that this, too, is something you wouldn't know from Japan.

The basis of monetization is avatar skin items such as clothing. Ohnogi finds this interesting and compared it with "flat-screen games" played on a PC or TV. Flat-screen games also have genres like MMORPGs, but in VR games, and especially social VR games, the desire to dress differently from others and stand out is even stronger. Ohnogi sees this as a form of the desire for recognition, and said that is one of the things that makes social VR games what they are.

At the same time, newly released games are evolving, and monetization points beyond skins are increasing. Specifically, a trend has emerged of users paying for purchases linked to game mechanics. The example he gave was exploration games. As you explore, you obtain various items, and the deeper you go the stronger the enemies become, so you need strong weapons and tools. You can collect items and craft them yourself to take on the challenge, but if you pay a little, you can easily get a weapon. He said the number of users spending money through such mechanisms is growing.

For Hello Kitty Skyland, Ohnogi said he wants to leverage Sanrio's IP to the fullest. Looking at Sanrio's business model, it generates substantial revenue from licensing and merchandise, and fans have a strong tendency to want clothing and items featuring Sanrio characters. For that reason, the design and development are centered on avatar skin items as the base. In future updates, they plan to add more monetization points within elements such as collecting items to make things. For example, players can have a "My Room" in the game, and they are working on a design where it can be expanded through in-game actions, or expanded immediately by paying a little.

On team building, Ohnogi said it is especially hard in Japan, because there are almost no people in the market with experience making VR games. Hiring centers on people with smartphone or console game development experience, which makes assessment important. What is needed, he said, are people who can flexibly switch to a way of thinking completely different from their previous development philosophy.

The broad process of game development—designing the gameplay, engineers coding, artists drawing—doesn't change. But the user experience and controls are completely different. He explained that they focus on hiring people who can flexibly think through and implement "how things should be done in VR," "what experiences are unique to VR," and "what can only be done in VR."

Ohnogi's previous job was at the mobile game company gumi. He worked on the business alongside the founder and was responsible for launching overseas operations. After the company went public, VR emerged as part of a push to expand the business by taking on technologies beyond mobile games and doing entertainment. From 2015 to 2016, gumi launched a VR fund and started incubation programs in Tokyo, Seoul in South Korea, and Helsinki in Finland, making more than 100 investments in total. Ohnogi said he was in charge of the launch and investment activities.

Through this work about ten years ago, he saw an enormous number of startup products at the MVP level, building up his expertise in VR products. Since founding Thirdverse, he has continued to study VR games on a daily basis to this day. What he pays particular attention to is "what experiences are only possible in VR," and observing details such as how something feels to touch or to throw has become his expertise. He said the whole team is working on making games that put this to use.

When Iijima said that Japan feels behind and asked how the gap with the rest of the world could be closed and where the opportunities lie, Ohnogi first said that people in Japan should look more toward the world, but that there are also reasons why that is difficult. Japan has a large domestic market, and it is possible to succeed sufficiently by thinking only about Japan. Its geographic situation as an island nation also plays a big role, and living in Japan, people rarely look overseas. If you are running a startup or business, you have to look at the world, but the conditions don't make that possible.

What Ohnogi personally considers important here is role models. Increasing the number of companies that expand overseas and succeed overseas is the most important thing, and he said he is running his business out of a desire to make that happen. Iijima responded that if this were achieved with Sanrio characters, which are understood around the world like a common language, more people would aspire to enter the VR industry.

On differences with the rest of the world, Ohnogi acknowledged that language is a fundamental issue, but pointed out that Silicon Valley has people from many countries besides the US. It has the world's largest ecosystem and many VCs, so everyone gathers there with that as their target. In the XR industry, too, he has opportunities to talk with founders from various countries, and what he senses is that founders from each country are leveraging their own strengths.

For example, when an American founder told him they were about to make a game using a famous American IP, Ohnogi wondered how they had acquired that IP, and concluded that their greatest strength was having grown up in the US and being part of its internal networks. Conversely, it is relatively easy for his team to obtain Japanese IP. To win globally, the only way is to go as "Team Japan," Ohnogi said. While building local networks in the US, when he thinks about what they can do as a Japanese company—not just in terms of technology—in competing with Americans and entrepreneurs from around the world, he believes that bringing in Japanese IP and creating content based on the company's expertise and experience is probably the closest path to victory.

When Iijima asked whether Japanese companies have a chance in a market where teams of a few people are generating revenue on the order of 10 billion yen, Ohnogi replied that, as someone who has long worked in overseas business, there is something he is convinced of. In terms of the skill sets of businesspeople and engineers, Japanese people are basically more skilled. The only differences are approach and mindset, and he shared his personal view that anyone can do it if they go in with the determination to win globally.

Finally, asked for advice for viewers taking on business challenges, Ohnogi cited his experience of frequently talking with people at Silicon Valley's big tech companies. At Meta, for example, even when hearing what Mark Zuckerberg talks about internally each week, he keenly senses that even big tech is going through trial and error. They will look in one direction now and then casually change course, suddenly deciding another direction is better. That is exactly why he hopes people will watch what the world's top-10 big tech companies are trying to do and respond flexibly. Amid a steady stream of new technologies, there are always business opportunities, and it is important to step into them with a bias for action, he said.

When Iijima said that rapidly growing companies seem to know the future and charge ahead, and that they had been intimidated without reason, Ohnogi responded, "That's not it at all," and said, "I think you should let go of the admiration." This reiterated his earlier remark that, in terms of technical ability and skill sets alone, Japanese people are more than capable. Iijima closed the conversation by taking away that if you let go of that admiration and take on the challenge as Team Japan, opportunities like IP collaborations are there.