Kosuke Arai of “arrova,” the Pioneer of the Metaverse Ads Business, Works to “Build a Co-creating Community with Users”
In partnership with Super League Gaming Inc., located in the United States, D.A.Consortium Inc. (hereinafter, “DAC”) has announced that it will sell ad spaces available in “ROBLOX,” an online game which 50 million users log in every day, for Japanese customers. This is the first attempt to sell ads in the Metaverse in Japan. At the heart of this project is Kosuke Arai, who joined the company in 2019. He launched “arrova,” a virtual space advertising service, through Hakuhodo DY Group’s in-house entrepreneurship program called “AD+VENTURE.” This is the interview with him about the potential of advertising in the Metaverse and about his vision for the future.
The Largest Number of Achievements within Japan in Virtual Space Advertising Development
– First of all, tell us about arrova.
arrova is a media business design business in the XR and Metaverse domain. It provides the creation of new media experiences and new formats of advertising utilizing virtual space and XR technology. We have already formed partnerships with major game companies and IP holders and are running ads in games and metaverses such as “Virtual Shibuya” and “Virtual Roppongi.”
In-game ads have been around for some time, but Metaverse ads have high visibility because of the immersive experience. We can start with in-game signage advertising and develop plans optimal for each sponsor. As an example of future service development with mobility sponsors, we are thinking of making a 3D model of a car and introducing that in a game so that people can test drive the car virtually.
– Are there any competitors taking similar actions?
Of course, other advertising companies and media companies are working on this. But I think we are ahead of them in Japan regarding sales. We are already working with companies overseas with solutions, and as one of the results, we will sell ad spaces within ROBLOX, a gaming platform with over 200 million users worldwide.
*Related press release: DAC and Super League Gaming Inc. Start Japan’s First Metaverse Ad Selling Service – a Virtual Space Advertising Service “arrova,” Enables Ad Distributions within “ROBLOX,” a Gaming Platform with Over 200 Million MAUs Worldwide
Having No “Reality” in the Pandemic and the Impact of Travis Scott
– What made you decide to start arrova and be a pioneer in the domestic market?
The COVID pandemic hit us 6 months after my initial training for new 2019 employees, and I was forced to work from home. Because I was working alone at home on my computer all day, I could not feel the “team accomplishment” feelings or see the output of my work. They were not “real.”
That’s when Travis Scott held a virtual concert on Fortnite*. It was just a few months after the pandemic began. I was shocked to learn that more than 12.3 million people connected to the concert simultaneously. Travis indeed created a new form of entertainment in the pandemic world.
*Fortnite…One of the world’s largest online games, with over 350 million users.
And because I joined the Hakuhodo DY Group because of my love for TV commercials, I always wanted to create ads with entertainment essence that would unveil users’ latent desires or create a format that would give excitement to people through ads.
With only a 9-minute concert, Travis sold about 2.1 billion yen, 20 times the sales of a regular tour. I was surprised that a new form of entertainment born in a physically limited situation could generate such a high engagement. I felt great potential with it for the future of advertising. My partner and I created the proposal during the year’s summer vacation and applied to AD+VENTURE, and the commercialization of the project was decided at the beginning of 2021.
– Isn’t it rare to create a business three years after joining the company?
That is why I was really surprised when I passed the first screening. After that, we built our business by receiving advice from seniors. The Hakuhodo DY Group has a cross-sectional organization within the XR domain called hakuhodo-XR, being in charge of media development. People can collaborate by leveraging each one’s knowledge and engaging in friendly competition while receiving advice from legendary seniors in the Hakuhodo DY Group.
A cross-sectional organization of nine companies of the Hakuhodo DY group, providing total support from upstream to implementation (https://hakuhodo-xr.jp/)
“I see a business potential in combining XR and IP, leveraging Japan’s asset.”
– How much do you think the Metaverse will grow in the future?
In the U.S., some say that the market will grow as big as 900 trillion yen. Though I don’t 100% agree with that, I think the utilization of the Metaverse will increase as the communication technology advances to 5G and 6G, and the number of digital natives like me grows. Yes, it is a world enjoyed by some early adopters at the moment. But we are seeing communities being created in each space. The results show that the engagement of those who stay, while in a niche world, is quite deep.
– In what areas do you see the Metaverse has business potential?
Since Japan’s IP culture is very strong for overseas markets, I have high expectations for businesses combining IP and XR. Our job is to connect IP holders such as publishers with companies with XR technology and design how to communicate with people from the user’s point of view. In the Metaverse, technology tends to take precedence. There are many cases where the technology is excellent, but the users aren’t much interested, or the image quality is superb, but users never see it twice. It is crucial to design the content by understanding what kind of experience the users want and what kind of impact that will cause. We do not simply create and sell new ad spaces in the Metaverse. We emphasize the creative aspect, designing experiences that fit each client.
The Key to Success is Creating a Co-creation Space with Users
– What kind of experience is required for a successful Metaverse?
The important thing is how well it establishes itself as a community, Being a space where people having a passion for the culture and content can gather and become a community.
Until recently, users only received packaged entertainment content such as movies and TV programs. But the trend now is co-creation, such as designing clothes and houses in “Animal Crossing: New Horizons” and TikTok memes.
To make people want to return to the space, there always has to be “something to do.” It would be ideal for creating media in which a single concept is spread by users like a meme. I think the key to success is how much significance the Metaverse can create for people to visit.
*Meme: A phenomenon that spreads by imitating videos posted by others, such as dancing to the same song with the same choreography.
– What is your vision for the future of arrova?
We want to expand the advertising market, but we also want to create new communication formats. We aim to design the best XR experience for each client working with them.
New Technology Business Development Division
Research and Development, Open Innovation Promotion Office
Project Leader of arrova
Joined Hakuhodo DY Media Partners Inc. in 2019. Applied to “AD+VENTURE” while on assignment at TBWA HAKUHODO. After winning the selection process, he started a service called arrova, a service that develops media and sells advertisements in virtual spaces.
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