Japan's Metaverse Economy: How Tokyo Is Monetising Virtual Identity

Japan's Metaverse Economy: How Tokyo Is Monetising Virtual Identity - Blockchain.News

Avatars aren’t a sideshow in Japan—they’re a business model. In 2025, Tokyo’s metaverse push is less about headsets and more about turning virtual identity into IP that can be licensed, sold, and protected.

Tokyo’s strategy: regulate first, commercialise fast

Japan’s playbook is to make web3/metaverse rails part of national “social infrastructure,” not a speculative sandbox. The Web3 White Paper 2024—a follow-on to the 2023 policy paper—frames a government–industry program to build a “safe and secure” environment for tokenised content, identities and payments. It’s explicit about moving from pilots to adoption across finance and media.

Ministries are reorganising around that goal. METI’s Web3 Policy Office (set up 2022) coordinates tax, corporate and content policy across agencies; and in 2025 the government reiterated plans to make Japan “the most AI-friendly country,” aligning privacy and data rules to enable commercial uses of AI-driven identity and avatars.

Tokyo is also wiring the city itself. The Tokyo Metropolitan Government is building a digital-twin platform—a persistent, data-driven model of the capital—under a public roadmap that’s meant to host services and events in parallel to the physical city. In 2025 it published new public guidance explaining what the digital twin is and how it will be used.

Where the money is: avatars, fandom and brand IP

Japan already runs the world’s most mature VTuber economy: agencies manage virtual talents whose identities are brands in their own right.

Anycolor (NIJISANJI)—listed in Tokyo—projected ¥39 billion in revenue and ¥10.36 billion in net profit for FY starting May 2024, crediting merchandise, digital audio products and advertising. Investors rewarded the outlook with a one-day +21% move.
COVER Corp (hololive) publishes English IR material and trades as a public company; its disclosures show the IP-driven VTuber model is a repeatable business with diversified revenue (live, merch, licensing).

The pipeline doesn’t stop at livestreaming. KDDI’s consumer metaverse αU combines web3 storefronts and live events, and in 2024 the carrier announced it would integrate Google’s Gemini models to boost creator tools—shortening the distance between a fan’s avatar and a commercial asset.

Meanwhile, avatar-fashion platforms are mainstreaming virtual identity for Gen Z. Zepeto—widely used in Japan—claims 400 million global users and has formal agency tie-ups in the country’s ad market, a signal that virtual skins and looks are now a media channel brands pay for. SoftBank’s Vision Fund invested $150 million at a $1 billion valuation earlier, explicitly linking it to NFT-style digital goods.

Local governments have learned to monetise digital crowds. “Virtual Shibuya,” one of Japan’s first locally certified metaverse districts, has staged sponsor-backed concerts and seasonal events since 2020—bridging municipal branding with virtual footfall.

Why Japan can price identity: the legal plumbing

Commercial identity needs enforceable rights. Japanese law firms and agencies have been detailing how publicity rights, likeness, and avatar use apply in metaverse spaces, and what platforms must do about user behaviour, privacy, and jurisdiction. A 2024 overview by Nagashima Ohno & Tsunematsu, for example, walks through avatar publicity rights and cross-border enforcement—practical foundations for licensing a face that isn’t a face.

Policy has been evolving in parallel: tax changes approved for 2024 removed a major barrier to corporate token issuance by exempting unrealised gains on third-party-issued tokens—critical for firms that want to hold and issue digital items linked to identity and IP.

How Tokyo’s “virtual self” becomes a market

Put the pieces together and a workable stack emerges:

Identity as IP. Agencies and creators treat the avatar as a licensable asset across live shows, merch, and endorsements (Anycolor/Cover’s public numbers show it pencils out).
Spaces to spend. City-scale twins (Tokyo) and district-scale venues (Virtual Shibuya) sell reach to sponsors and brands, while carriers like KDDI run always-on social worlds where fans buy virtual goods.
Distribution and ads. Avatar platforms such as Zepeto plug into Japan’s ad industry via agency deals, turning virtual looks into media inventory.
Rules and rails. METI’s web3 policy office and recent AI-friendly signals reduce regulatory ambiguity; token-accounting reform lowers the cost of issuing and holding digital goods; law-firm guidance clarifies avatar rights.

The caution flags

Japan’s approach is careful, not reckless. The country remains conservative on crypto ETFs and continues to move deliberately on retail-facing financial products, a reminder that “metaverse economy” does not mean deregulation. The VTuber sector also isn’t risk-free: agency scandals abroad show how quickly a creator-economy balance sheet can wobble when trust breaks.

What to watch next

Tokyo’s digital-twin services moving from demos to paid utilities—events permits, tourism, mobility trials, or data-licensing.
Carrier-backed worlds (αU) adopting AI for avatar creation and commerce, which could lift margins for virtual-identity goods at scale.
IP-rights playbooks for avatars becoming boilerplate across agencies and brand deals, reducing legal friction for sponsorships and cross-border appearances.

The bottom line

Japan hasn’t tried to will a headset revolution into being. Instead, it has professionalised the avatar economy, tuned policy to reduce frictions, and started wiring Tokyo into a civic-grade digital twin. That’s how virtual identity becomes a business: clear rules, valuable IP, places to perform—and millions of fans prepared to pay for the versions of themselves they most want to be.

Sources: noandt.com, KDDI ニュースルーム, english.metro.tokyo.lg.jp, Financial Times+1, noandt.com+3Ministry of Economy, Trade and Industry+3Inside Privacy+3, Dentsu, 東京都デジタルツイン実現プロジェクト+2english.metro.tokyo.lg.jp +2, The Wall Street Journal+1, The Block+1, noandt.com+1, fds.or.jp+1, Dentsu+2Vogue Business+2, KDDI ニュースルーム+1, カバー株式会社 | つくろう。世界が愛するカルチャーを。+1, The Wall Street Journal, 東京都デジタルツイン実現プロジェクト+1, Ministry of Economy, Trade and Industry+1, taira-m.jp+1

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