The collaboration was announced in August last year, but what specific areas and businesses will it take place in?
Shunpei Tatebayashi (hereinafter, Tatebayashi): There are two main reasons. DEA has originally focused on the development of blockchain games (BCG). BCG plays an important role in the spread of Web 3.0. We would like to support the spread of this BCG to the general public.
KDDI has already developed a market and wallet, so I think it is possible to collaborate with our "αU market". The other point, which is also what got me interested in DEA, is support for activities that explore the possibility of solving social issues using blockchain.
DEA has already started working in this field, and I am attracted to this innovative approach. I have been thinking about whether we could work together, so I would like to cooperate in terms of building a partnership and aiming to scale up together, such as dealing in NFTs born from this project on αU market.
Kozo Yamada (hereinafter Yamada): We get very high-resolution responses from Tatebayashi.
For example, many people are surprised when we talk about solving problems through games, such as our utility pole photography game with TEPCO Power Grid and GGG, but Tatebayashi is actively involved in these projects himself, analyzing our activities in depth and providing us with valuable feedback.
His understanding and support have helped our efforts to become more widely recognized, which is very encouraging.
Tatebayashi: My first impression of DEA was that they were a mature startup that had already developed BCG and issued tokens, and was actually developing business in the Web 3.0 field and addressing social issues. However, through my conversations with Yamada, I learned that this "mature startup" has a good sense of playfulness that truly believes in the infinite possibilities of blockchain, and I found it very interesting.
We meet almost every week, and what's fascinating about these conversations is that they generate a variety of ideas and lead to solutions. I think this balance of maturing while also shining eyes at new possibilities is wonderful.
DEA, which has this solid landing point and expands the possibilities of blockchain, is a great partner that can approach new business opportunities from multiple angles. We have invested in over 150 companies, and I think DEA embodies the importance of always keeping a fresh perspective as a manager.
Yamada: When I talk to Tatebayashi-san, he often suggests new ideas to me.
For example, he had an idea that it would be fun to develop a game in which you push a robot vacuum cleaner slightly to rescue it when it gets stuck on a step. I think he is a person with a flexible way of thinking that doesn't restrict things like this.
Tatebayashi: Regarding new business development at KDDI, I take the stance of being a collaborator and supporter rather than planning it myself. Rather than starting a business related to Web 3.0 on my own initiative, I want to respect the deep thinking of business managers who are fully committed to a specific field and help them scale together.
The thoughts and knowledge of full-time startup managers are much deeper than those of part-time salaried workers. Therefore, I think we should nurture the ideas of such people together. This will be a new business opportunity for us, and we will provide them with the necessary support.
The ideas that I come up with may already be months old for Yamada. I would like to walk together with business managers who are familiar with the market.
Yamada: Many people respond to our remote trash sorting game by saying, "Technology will improve in the future," but the truth is, that's not the case.
This initiative aims to make it possible to remotely handle not only trash but a variety of other items in the future, and to smoothly return rewards through Web 3.0. We are very grateful that KDDI has a deep understanding of this true purpose and is spreading its significance to other companies.
How do you think Web 3.0 will change the entertainment industry?
Yamada: From my experience at TV Tokyo, one of the issues I've noticed is the phenomenon of personal tastes becoming fixed as the internet becomes more widespread. In the past, television was a place where families gathered, and what was watched was often determined by family composition.
For example, there was a term called "channel rights," and if there was someone in the family with strong opinions, they would watch the programs that they liked, and they had the opportunity to be exposed to a wide variety of content. But now, content is recommended to people based on the assumption that "this is what you like," making it difficult to go beyond your own preferences.
For the entertainment industry, this is a problem that will lead to a shrinking market.
For example, when developing a card battle game, there is a discussion about how to reach the existing fan base and how much market share can be gained. This approach is an effective way to spread content, but it does not lead to market expansion.
It only leads to a fight with competitors over a piece of the pie, and the industry as a whole does not grow. In order to expand the market, a strategy that "pierces the horizontal axis," so to speak, is needed to approach those who are not interested. This is the key to expanding the market and opening up new possibilities.
Tatebayashi: With the advent of the internet and the development of recommendation systems, it was thought that the 2010s would see an increase in encounters with new content.
For example, even if you've heard the top 10 songs on a Japanese music ranking, you'll be able to easily access songs lower down that you've never had a chance to come across before, but you'll be completely unfamiliar with them, or you'll be recommended new songs that you might like based on your three favorite songs.
There was hope that the options would expand, but for Yamada, this is something that we're talking about after that era has passed.
Yamada: That's right. As you say, if we take TikTok as an example, I think it has made recommendations that adapt to serendipity. When I spoke with someone from Meta (formerly Facebook) about two years ago, I heard that Mark Zuckerberg was working hard to change the Instagram algorithm.
In other words, if we don't put in more information and content that people don't like, the market will shrink. However, it can be stressful for existing users.
Tatebayashi: There is also the possibility that it could become noise.
Yamada: There must be a fine line between the expanding and closing parts.
What factors besides money will help Web3.0 scale?
Yamada: I think it's the feeling of contributing to a social issue, that is, the experience of feeling that you are contributing to society. This brings great satisfaction to people regardless of age or gender. Removing financial barriers and guiding people to such experiences could be one of our main goals.
Tatebayashi: I agree with that point. When I think about what people would be happiest to see visualized, I think it's the degree of contribution. Contributions can take many forms. For example, some fans of idols or rock bands think that they will stop being fans once they perform at the Red and White Song Battle.
This is because they only feel satisfied when they support the group, and after that, the number of fans increases so much that it becomes difficult to see their own contribution. On the other hand, when they are still underground idols with few fans, they can see that their support is having a direct impact. I think that having their contributions clearly shown leads to a sense of accomplishment for individuals.
If this kind of visualization of contributions could be achieved, as in the case of a book published in Japan using crowdfunding, having the names of investors listed at the end would lead to a sense of accomplishment.
If contributions are recognized as having monetary value, the sense of accomplishment would be clearer and more meaningful. I believe this will lead to the economicization of fan business.
What do you think about the position of cryptocurrencies (tokens) within the Web 3.0 ecosystem (games) and their impact on future business models?
Tatebayashi: Looking back, I think that strict domestic regulations were ultimately a good thing. In particular, considering the background to the occurrence of large-scale incidents such as FTX overseas, Japan's strict regulations actually played an important role in protecting Japan's Web 3.0 business, in contrast to a few years ago when they were often seen as an obstacle for major companies to enter the Web 3.0 field.
Based on the recognition that strict regulations were the right answer, I think discussions are underway on which regulations should be relaxed in the future. I think it is a very positive development that we have moved to the stage of considering the next step, rather than calling for complete relaxation just because Japan is stricter than other countries.
At the same time, as the country promotes Web 3.0 as part of its national strategy, I feel that there is a growing awareness that if legal and tax regulations are not gradually relaxed, there is a risk that companies will withdraw from this field, and that appropriate measures must be taken. Compared to past movements in various fields, the government's response to Web 3.0 was swift.
Yamada: The FTX issue was an unfortunate event for the entire industry, but it led to Japan attracting global attention in the field of Web 3.0. I think the LDP web3PT initiative was good. Also, because Japan has given its own permission in terms of AI learning, the way startups from all over the world are gathering there is reminiscent of Singapore. The flexible response to DAO is also a good direction.
What kind of games need to utilize NFTs and blockchain?
Yamada: We do not believe that Web 3.0 technology is absolutely necessary for the project we are currently working on with TEPCO Power Grid. Crypto assets are not required to generate incentives in specific regions, and we are also planning to use Amazon gift certificates this time.
Although it is possible to build a system comparable to Web 3.0 using general database management and an approach that does not use blockchain, we believe that the key is that the use of Web 3.0 makes it possible to subdivide cross-border activities and reward systems. This is a very important point.
Rewarding expands the community, which also leads to the spread of marketing. The garbage sorting game also aims to cross borders, and was originally inspired by a remote control system that a major waste disposal company was working on.
It started with the idea of enabling workers to work remotely from a comfortable place to improve the harsh working conditions. Gradually, the focus shifted to how to gather participants from all over the world and smoothly provide compensation for short-term work in order to solve the labor shortage.
We have been researching cross-border micro-reward systems within the BCG economy for many years. We believe that this experience will help solve the problems of recruiting personnel and paying compensation in the garbage sorting project.
Activating cross-border micro-actions using Web 3.0 can be applied to a wide range of applications, not just garbage sorting, and provides a new solution to a common problem on a global scale. This is a strong reason to use Web 3.0 to solve global problems.
Tatebayashi: We have been running a startup acceleration program called "∞Labo" for over 10 years.
I remember one participant coming up with the idea that some Japanese people find it hard to get up in the morning, but that somewhere on Earth there is always someone awake, and if they could wake you up, you might not need the energy to get up.
This is just an example, but the idea that it would be easy for someone on the other side of the world to help you may be close to what Yamada-san said.
From the business perspective, what do you think about privacy and security issues in the Web 3.0 field?
Yamada: From a security perspective, billions of yen worth of damages are reported every week. There is a new trend of returning money after hacking, such as white hat hackers, but it will be interesting to see how this will be handled legally.
Blockchain is considered safe, but I think the mechanisms to ensure its safety are evolving painfully. In reality, most hacks are caused by human error. Even in Web 3.0, the cat-and-mouse game of security continues, and we are trying to operate with the utmost caution.
In the advertising industry, the problem of unauthorized commercial use of personal cookie information has become a global issue, but DID is a fundamental idea that restores the discretion of individuals to manage their data. Currently, we are testing a system called "Answer to Earn" as a form of advertising using Web 3.0.
This system turns advertising videos into content, and it is difficult to answer a quiz correctly unless you watch the video in its entirety, and if you answer correctly, you will receive a reward. This system has been very well received, as it allows users to enjoy watching the entire video while also not easily generating negative reactions.
The main direction of Answer to Earn is to use personal information in a way that gives individuals complete control over it, with a meaningful, long-term approach that allows them to freely convert their information into value. If it evolves in this way, Answer to Earn could become a role-playing game in the real world.
If you don't provide any information, you're just a viewer, but by disclosing information about yourself, you can raise your user level. We believe this is far more desirable than Google or Facebook using personal information without permission.
You will be able to manage your own information and enjoy it. It is a new form of advertising where you attach value to your own information.
Tatebayashi: I think there is a fundamental difference between the information that is authenticated and the disclosure of the data required for that authentication. For example, if you are asked for identification at a video rental store and you present your driver's license, you submit the license for personal authentication, but the clerk can also see your address.
This will no longer be the case if the information is digitally authenticated using the DID approach.
More specifically, when buying alcohol, you should only show that you are over 20 years old, and I don't think there is any need to display your face photo or address. Telecommunications carriers can efficiently carry out the KYC (Know Your Customer) process, so for example, if they can add information to Mr. Yamada's wallet that he has been authenticated by the telecommunications carrier, that will function as a certificate.
This allows people checking the wallet to know that the person has been authenticated in some way and can be trusted. This way, there is no need to disclose personal information such as Mr. Yamada's annual income, family composition, or address.
As wallets become a means of identifying individuals, I believe that telecommunications carriers have a major role to play. Authentication is important, and when presenting a wallet calls into question your identity, a trusted telecommunications carrier can play that role.
When anti-money laundering measures are required, it is necessary to be able to track people, but it is possible to provide only authentication information without handing over personal information.
Please tell us about your future prospects and aspirations for the business you are involved in.
Yamada: We will continue to develop our game business with the aim of solving problems. Existing users sometimes ask if we are going to abandon the entertainment element, but that is not the case at all.
Rather, our goal is to help people understand that they can contribute to society in a sustainable way while having fun through the products we provide. We will work to combine both social contribution activities and entertainment. KDDI has a wide variety of content, so we would like to work together with them while utilizing that.
Tatebayashi: As this is a dialogue project, we will set aside our own business for the moment. We are betting on the future of Web 3.0 and blockchain, and we place great importance on whether we can contribute to widely publicizing its use cases.
There are certainly many innovative ideas, but it takes a lot of effort for a startup to realize them, gather users, and build an economic sphere on its own. We would like to play a role in finding such projects and actively spreading them.
Our goal is to spread the use cases of Web 3.0 to the general public, aiming for the cultural penetration that SNS and other such services achieved a few years ago. Our focus is on how many cases we can create and support to the level of social acceptance from this year to next year.
Shunpei Tatebayashi
Joined KDDI Corporation in 2006 and was in charge of network design for the mobile communications business. Since 2012, he has been involved with the venture support program KDDI∞Labo and the venture investment fund KDDI Open Innovation Fund, investing in venture companies mainly in the mobile game field and engaging in joint ventures in game publishing. Since 2017, he has been in charge of alliances and new businesses in the sports, entertainment, and XR fields as a group leader. Since 2021, he has been promoting the establishment of JVs in the mobility field as Deputy Director of the Business Development Department. In 2022, he became Director of the BI Promotion Department, and in April 2023, he became Director of the Web3 Promotion Department.
Kouzou Yamada
Born in 1977. After graduating from the Faculty of Law at the University of Tokyo, he joined TV Tokyo in 2002. He is in charge of program production, mainly music and variety shows in the production department. He is skilled in collaborative planning with digital media. In 2018, he became independent and is involved in the production of entertainment in general. In 2018, he founded DEA in Singapore. He operates the NFT game platform business PlayMining. In January 2022, he led the Play to Earn token "DEAPcoin (DEP)" to its first listing in Japan. He is an expert on NFT games and disseminates information on note and other platforms.
Challenging the future of "Web 3.0 Entertainment" │ Interview with Kozo Yamada
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