NTT Docomo will use its wireless technology to enter the metaverse
Japan’s NTT Docomo will move into the industrial metaverse in the next few years by offering design and other tools powered by its own wireless technology, CEO Motoyuki Ii told Nikkei Asia.
“Games have driven the metaverse so far, but industrial applications will grow in the future,” Ii said in a recent interview.
He acknowledged that Japanese companies have lagged international peers in staking claim to the metaverse — a virtual space where people interact through avatars. But Ii sees helping companies go digital as a way to make a comeback.
For Docomo, which leads rivals KDDI and SoftBank in wireless market share but not in profitability, the metaverse offers a chance to diversify. Docomo aims to have operations beyond its core telecom business, including the metaverse, account for at least half of sales by fiscal 2025.
Jun Sawada, president of Docomo’s parent NTT, sees the metaverse as the group’s next mainstay business. “We need to plan for the post-smartphone era,” Sawada said.
Docomo will work with partners including startups to develop the industrial metaverse tools. They will be made available to a wide range of businesses large and small. By October, the carrier plans to establish a company with about 150 engineers and other staff to start the project.
For its metaverse tools, Docomo envisions a virtual space where engineers in remote locations can come together and use the tools to jointly develop products or test prototypes. These services also will employ augmented reality, in which real-world objects are enhanced with pop-up data.
The tools are meant to help manufacturers overcome staff shortages and pass on skills from experienced workers to a new generation.
Computer-assisted 3D design and development is already widespread in the automotive industry. But this process remains mostly confined to computer screens. The metaverse is expected to provide greater immersion so that engineers can better evaluate virtual prototypes.
Competition is fierce in virtual reality goggles and other wearables, with companies like Facebook parent Meta and Apple joining the fray. But bulky VR equipment has yet to reach the mainstream. Ii said Docomo aims to provide “user-friendly devices that are comfortable,” including lightweight VR glasses.
Docomo’s industrial metaverse ambitions will build on the Innovative Optical and Wireless Network, a next-generation communications infrastructure known as IOWN being developed by the entire NTT Group.
IOWN envisions optical signals replacing electrical ones as carriers of data through networks. This would multiply data transfer capacity by a factor of 125, while slashing latency and power usage by factors of 200 and 100, respectively, according to Docomo.
NTT is developing proprietary semiconductor devices using this technology, which will make possible compact and lightweight VR equipment.
Such devices could use sixth-generation, or 6G, telecommunications. Data transmission speeds on 6G are expected to be more than 10 times faster than 5G. IOWN is expected to become commercially available as early as 2025, with 6G hitting the market around 2030. NTT and Docomo intend to start an indoor 6G test with Japanese electronics group NEC and other partners this fiscal year.
Docomo already has a metaverse business for the consumer market. The company in March established XR World, where participants can experience concerts and other events. Users can enter the platform via smartphones and PCs without relying on VR goggles.
In the NTT Group vision, the metaverse will take advantage of its photonic-based IOWN (Innovative optical and wireless network), still under development, that is aimed at improving bandwidth by 125 times and delivering latency of 1/200 of a second.
Docomo sees the metaverse as an important part of its diversification strategy. It’s aiming at non-telecom services accounting for half of revenue in three years.
Docomo’s pursuit of industrial customers reflects Japan’s shrinking smartphone market and falling mobile rates. The carrier intends to shut 30% of its brick-and-mortar Docomo shops by the end of fiscal 2025. Meanwhile, it aims to draw more virtual customer visits.
Docomo became wholly owned by NTT in 2020 and delisted from the Tokyo Stock Exchange. The carrier earned an operating profit of 927.9 billion yen ($6.94 billion) for the fiscal year ended March 31, accounting for roughly 50% of NTT’s profit groupwide.
The metaverse market is expected to expand to $828 billion in 2028, or nearly 20 times the scale in 2020, Canadian analytics firm Emergen Research predicts. Industry lines are blurring: Japanese advertising group Hakuhodo DY Holdings has started selling virtual ads for metaverse platforms.
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The leading telecom operator in the metaverse space is SK Telecom. Its Ifland platform is one of South Korea’s two big metaverse services, with a reported 1.5 million MAUs. It has signed up Deutsche Telekom as a European partner and says it wants further partners around the world (see SKT soars into metaverse as AI businesses gather steam). Ifland is one of two services run out of SKT’s AI unit, which took in $222 million in revenue last year and is aiming to reach $1.6 billion by 2025. SKT’s thinking about the metaverse is interesting. It sees that Ifland doesn’t suck up much capex and can leverage the operator’s 5G infrastructure and customer base to grow the business. Over time, Ifland will help expand the user base and enable new subscriptions and other services.
Telcos everywhere else in the world will struggle to build a business case for a metaverse platform – but there are plenty of other metaverse roles for them to chew on, and it increasingly looks like it is going to be too big to ignore.
Consultancy McKinsey has forecast that the metaverse could generate a “$5 trillion impact” by 2030. In a recent survey of executives, it found that 95% believe the metaverse will have a positive impact on their industry.
“About a third of them think the metaverse can bring significant change in how their industry operates, and a quarter of them believe it will generate more than 15% of corporate revenue in the next five years,” McKinsey said. It urges companies to venture into the metaverse to get a better sense of what it entails.
“There is no avoiding the fact that if you want to both understand consumers and opportunities that may be available to your organization, you need to be familiar with the metaverse,” McKinsey said.
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The Metaverse Is Quickly Turning Into the Meh-taverse- Disney and Microsoft both closed projects tied to the digital realm this month
The metaverse was a hot thing in tech less than two years ago, but is now facing a harsher reality. Slow user adoption, driven in part by expensive hardware requirements and glitchy tech, and deteriorating economic conditions have put a damper on expectations the metaverse will drive meaningful revenue soon. Recently:
-Walt Disney Co. has shut down the division that was developing its metaverse strategies,
-Microsoft Corp. recently shut down a social virtual-reality platform it acquired in 2017.
-Meta Platforms Inc. (formerly Facebook) is focused more on artificial intelligence, CEO Mark Zuckerberg said on an earnings call last month.
Meanwhile, the price for virtual real estate in some online worlds, where users can hang out as avatars, has cratered. The median sale price for land in Decentraland has declined almost 90% from a year ago, according to WeMeta, a site that tracks land sales in the metaverse.
“What many people are coming to realize is that this transformation is farther away,” said Matthew Ball, a venture capitalist and author of a book about the metaverse.
Tech companies have been slashing jobs and abandoning projects deemed nonessential. Mr. Zuckerberg, who championed the metaverse as the next iteration of the mobile internet a mere 18 months ago, dubbed 2023 “the year of efficiency.” His company laid off 11,000 employees in the fall and said this month that it would cut a further 10,000 positions and various projects, including some that are based in its metaverse division, the Journal previously reported.
“A lot of companies and businesses understandably feel like if they need to reduce head count or spending overall, this kind of category would seem to be a pretty easy target,” said Scott Kessler, a tech-sector analyst at research firm Third Bridge Group. Investments in artificial intelligence promise returns in the nearer term, he added.
“All these things that are going on, related to AI, seem to be able to be used and leveraged now,” he said. With the metaverse, “no one knows when you’re going to reach critical mass.”
Even at the height of the metaverse craze, some tech executives were less enamored with online realms. “I want to try and work on technologies that bring people’s heads up—get them to enjoy the real world,” David Limp, senior vice president of devices and services at Amazon.com Inc., said at The Wall Street Journal’s Future of Everything Festival last year.
Meta has spent billions of dollars trying to build out the metaverse since changing its name. But its flagship app, Horizon Worlds, struggled to gain and retain users within the first year after the renaming, according to internal documents viewed by the Journal. Sales of its Quest 2 virtual-reality headsets, which are used to access Horizon Worlds and other virtual-reality apps, were also down in the most recent quarter, the company said.
Mr. Zuckerberg isn’t walking away from the metaverse, signaling that it remains a long-term focus for the company after AI. “The two major technological waves driving our road map are AI today and, over the longer term, the metaverse,” he said last month.
On that call, “AI” was mentioned 28 times. The word “metaverse” was mentioned on seven occasions. Meta didn’t respond to a request for comment.
The pivot at Disney comes amid its recent leadership change and restructuring. Chief Executive Robert Iger returned to the company in November and has started slashing costs. The company last month said it plans to cut 7,000 jobs and reduce costs by $5.5 billion.
Microsoft also bet big on the idea of online digital realms, though struggled with implementing that vision. In addition to shutting down AltSpaceVR, the company’s work on augmented-reality headsets was plagued by problems, the Journal reported last year. The company has since restructured the HoloLens team and trimmed its budget, the Journal has reported. Microsoft said it “remains committed to the metaverse” with both hardware and software tools.
Smaller companies such as Decentraland and the Sandbox where users have been able to buy virtual land and build their own worlds have seen some of the most success so far. But even so, land sales are down. The median price per square meter in Decentraland has dropped from about $45 a year ago to $5, according to data from WeMeta, the firm that tracks the sales.
A spokesperson for the Decentraland Foundation, which oversees the platform, said land sales aren’t indicative of user growth. A spokesperson for the Sandbox said all of the new land they have put up for sale over the past six months has sold out.
Despite a broad reduction in metaverse engagement, the online realms can still draw eyeballs. Decentraland, which saw a 25% decline in active users from November to January, is seeing an uptick this week from Metaverse Fashion Week, an event where brands such as Dolce & Gabbana and Tommy Hilfiger are participating, according to DCL Metrics, a site that tracks users in the digital realm.
“It is obvious that hype around the metaverse has receded. But we should not mistake this for a lack of progress,” said Mr. Ball, the venture capitalist who is bullish on the metaverse. “Change isn’t that fast.”
https://www.wsj.com/articles/the-metaverse-is-quickly-turning-into-the-meh-taverse-1a8dc3d0