Hikky, a Japanese start-up that organises virtual events, recently drew over 60 corporate exhibitors to a trade fair held virtually. Companies including NTT Docomo, Yamaha Motor and rail operator JR East took the chance to show off products and services to would-be customers joining remotely.
Visitors accessed the two-week Virtual Market event for free through methods such as strapping on a virtual reality headset and logging on to US social gaming app VRChat.
It featured virtual places and products that may have been difficult to see in person due to Covid-19 restrictions – JR East, for example, recreated Tokyo’s Akihabara station, where people could use a virtual card to enter the ticket gate and hop on a virtual train.
VR, sometimes referred to as the metaverse, has so far mainly been used in gaming, but Hikky’s event underscores how a wider range of companies are starting to tap the technology to promote their products.
Advocates say VR offers a more immersive experience than live-commerce events on apps like Instagram and YouTube, which many brands have flocked to since the pandemic started.
“There has never been anything to actually do when a lot of people gather in a VR space,” said Hikky CEO Yasushi Funakoshi. “But especially in the last year or two, due to the impact of Covid-19, companies had to use VR. But they did not know what to do, so they came to us.”
The backdrop is a fast-growing industry. Expensive VR devices and related hardware, such as computers with high processing power, were major barriers to the widespread adoption of previous efforts like Second Life, a virtual world released in 2003.
But headsets made by companies such as Facebook-owned Oculus have become increasingly affordable, while gaming engines have made it easier for developers to produce content.
The pandemic helped accelerate adoption as people spent more time at home. The average number of active VRChat users in September was about 15,000, up 47% from a year earlier and 2.4 times more than the same month in 2019, according to Steam, a popular video game distribution service.
That growth has stoked investor interest and prompted companies from various industries to look into the sector. Facebook is developing Horizon, a social game that users access with Oculus, while Microsoft has demonstrated using its headsets to help employees collaborate virtually.
Video gaming companies like Roblox and Epic Games, the developer of hit title Fortnite, have organised virtual music concerts.
Hikky says it has several competitive advantages against such tech giants. One is the potential to create killer content. Japan has a large number of people who create and use avatars – often virtual anime characters – to broadcast themselves playing games or performing.
One of the most popular avatars, Kizuna AI, has millions of followers on YouTube, TikTok and Chinese video platform Bilibili.
Hikky began in 2018 as a small community of avatar fans, including Phio, a Hikky executive who oversees the company’s events and who does not disclose his real name.
After suffering from depression, he found comfort in the virtual world, where he could interact with others without meeting them in person, and decided to organise a virtual event to showcase 3D avatars. Funakoshi backed the idea by using his experience in gaming and promotion to lure sponsors.
The company’s reputation was boosted by the pandemic. Hikky calls Virtual Market the largest virtual exhibition in the world, and also organises music, comic and gaming events. Funakoshi said he has held talks with investors over fundraising, although no deal has been reached yet.
Rivals have sprung up, such as Cluster, a virtual social platform that has recreated the Tokyo districts of Shibuya and Harajuku. The start-up said about 400,000 people visited its Shibuya Halloween event last year.
Whether the industry can maintain its momentum will be put to test after Japan began lifting Covid-related restrictions in October.
One challenge for Hikky and its peers is making events accessible for PC and smartphone users, without the need for expensive VR headsets. Companies hope such a move will extend their reach beyond VR users, but it risks degrading the quality of the content.
“For some types of content, breaking away from the head-mounted display is important to a certain extent,” said a venture capitalist who focuses on gaming and entertainment. “Being VR-only can be a limitation, such as when viewers replay the content on YouTube.”
Another hurdle is integrating payment options into the VR experience. Currently, virtual shops can only direct users to their e-commerce sites, which often means users must take off their headsets to make purchases.
Bringing transactions inside the VR world would help Hikky make money. Some companies are betting that virtual goods will become a distinct category. Beams, a major Japanese apparel brand, has designed 3D avatars for Virtual Market.
Hikky recently unveiled plans to launch what it calls the “virtual world’s first permanent shopping mall”, where users can access stores any time. The move “brings the virtual market closer to daily life,” Phio said.
“We are living in the 2D world … inside the screens of our smartphones and PCs. That will gradually be replaced by 3D.”