Japan: Enabling Virtual Entertainment, Retail, and Industrial Applications with 5G

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By Matthias Foo | 4Q 2022 | IN-6702

In this ABI Insight, we look at the latest performance updates from the four Communication Service Providers (CSPs) in Japan and the development of virtual entertainment, retail, and industrial applications enabled via 5G technology.

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Market Updates from Japan's Four Communication Service Providers


Japan has seen a tremendous uptick in the number of 5G mobile phone contracts, growing from 5.45 million to 36.42 million (a Year-over-Year (YoY) increase of ~568%) between December 2020 and December 2021, according to statistics published by the Ministry of Internal Affairs and Communications (MIC). Despite that, 5G mobile phone contracts remain a small proportion of the total number of mobile phone contracts at ~18%.

From the latest quarterly financial figures (ended June 30, 2022) published by Japan’s largest four Communications Service Providers (CSPs)—NTT DOCOMO, KDDI Corporation, SoftBank Corp., and Rakuten Mobile, which became the country’s fourth CSP in 2020—both NTT DOCOMO and SoftBank Corp. have seen decreases in consumer mobile services revenue YoY, while KDDI Corporation also posted lower Average Revenue Per User (ARPU) YoY. This was mainly attributed to the increase in competition in the consumer mobile space driving down the prices of mobile service plans. In the enterprise space, NTT DOCOMO saw an increase of ~8% YoY to ~US$810 million (¥117.3 billion) in the operating revenue of its enterprise solutions business. KDDI Corporation highlighted a ~16% YoY increase in revenue to US$601 million (¥87 billion) for its NEXT Core Business segment, while SoftBank Corp. posted an increase of ~12% YoY to US$365 million (¥52.8 billion) in revenue for its enterprise solutions.

Adoption of 5G Permeates the Entertainment, Retail, and Industrial Markets


Leveraging 5G’s capabilities to provide greater bandwidth capacity with low latency, has seen 5G become an enabling platform for creating new and innovation solutions across both consumer and enterprise markets. In the consumer space, the development of 5G applications revolves primarily around the delivery of immersive digital content to subscribers. In May 2020, KDDI Corporation partnered with Netflix and the Shibuya ward of Tokyo to launch Virtual Shibuya, a virtual/digital replica of the ward, with the goal of demonstrating the capability of 5G technology. On this virtual platform—accessible via Virtual Reality (VR) devices, smartphones, and computers—users (avatars) can interact with other users and attend various talk shows, music concerts, and events, with Virtual Shibuya Halloween being one of the highest profile events held on this platform. The project has since extended to other wards with Virtual Harajuku being launched in May 2021. Virtual Harajuku, with collaboration from the Laforet Harajuku department store and sneaker retailer Atmos also includes virtualized retail services as part of the customer experience, where users can make purchases in the virtual world and have the product delivered to them in the physical world.

Expanding on the concept of virtual retail use cases, another relevant example would be the XR Mannequin for APEXFiz digital solution developed for the apparel industry by Shima Seiki and KDDI Corporation in September 2022. XR Mannequin for APEXFiz is an Extended Reality (XR) solution—an overarching term covering Augmented Reality (AR), VR, and Mixed Reality (MR)—that allows users to have full virtual 360° views of product images, allowing for a range of use cases, including digital catalogs, VR showrooms, digitally-extended stores, virtual fashion shows, etc. By leveraging on 5G and Google Cloud’s Immersive Stream for XR service to store and distribute high-resolution digital images, users can access the XR product images across multiple device platforms, regardless of the end device specifications.

In the area of industrial applications, Nippon Koei and KDDI Corporation were chosen by the MIC to conduct a Proof-of-Concept (POC) project trialing the use of 5G capabilities for smart factory applications at an industrial park located in Thailand. The project, which commenced in January 2022, tests the use of high-resolution 4K cameras to provide remote supervisory support and the use of Artificial Intelligence (AI) to monitor equipment for early signs of failure through video analysis. In May 2022, SoftBank Corp. also announced that it had built a 5G Multi-access Edge Computing (MEC) site in the Kanto region of Japan. MEC enables ultra-low latency computing and data storage that is closer to the source of data traffic or end users. The deployment of the MEC site is aimed at enabling various industry use cases, such as factory automation, autonomous driving, emergency notifications, etc.

Clear Directions for the Road Ahead


Although Japan currently trails behind its Chinese and South Korean counterparts in terms of 5G coverage deployments, the government has outlined clear targets for the country to achieve 98% 5G coverage of the Japanese population by March 2024 at the Mobile 360 Asia-Pacific 2022 GSMA event conducted in August 2022. It is estimated that only ~30% of the population had 5G access in April 2022.

Growth in 5G is expected to continue its upward momentum in the country, given the developments in both the 5G consumer and enterprise markets. The major CSPs have each announced plans to invest heavily in their 5G deployments. For example, SoftBank Corp. recently announced its decision to raise additional funds of up to ~US$242 million (¥35 billion) to accelerate the deployment of 5G stations in the country in April 2022. This is in addition to the ~US$13.8 billion (¥2 trillion) investment plan announced by the company in November 2020.

As an indication of Japan’s key interest to be a future leader in mobile communication technologies, NTT DOCOMO announced a collaboration with Nippon Telegraph and Telephone Corporation (NTT), Fujitsu, NEC, and Nokia to conduct trials of 6G technology in June 2022. 6G is expected to greatly outperform 5G in terms of speed, capacity, latency, and power consumption. Nevertheless, concerns remain that investments in mobile communication technologies may lose momentum amid the global economic slowdown.

(Note: Conversions from Japanese ¥ to US$ are based on prevailing currency exchange rates.)