 Hey, everyone. Thank you for joining us. I'm really excited to be here with Aji and Kunimitsu-san. And just a real quick show of hands. How many people here have tried either an Oculus or a Vive, kind of high-end VR? Oh. Wow. OK, that's a lot. So that's great. So last year, it would have been like 25% of this crowd. And there's one more show of hands. How many people have tried like a HoloLens or one of the kind of higher-end AR devices? Wow, this is a surprise. So many people tried that, huh? This is awesome. So Aji and Kunimitsu both are coming from large Japanese mobile game companies that have started to both build VR products and invest in VR companies. And so my first question to you guys is it's been over a year since you started to really participate in this space. I mean, how's it gone so far? Like, has it met your expectations? Yeah, in the last one or two years, we launched a lot of, I think, 6, 7 VR games and also a few non-gaming stuff in the VR area. And also that was a really good learning experience for me, for us. And as you know, the first generation of the VR headset, the number of shipments is not huge. But at the same time, we launched several products and also launched online and also the location based offline. So we can get a lot of user feedback how they experience the VR content. And also we can learn a lot. So that was a good learning experience. And have you had any, like you said, I think you told me backstage, you've launched like six products now? Yeah, six, seven products. And have any of those really broken out or been hits for you yet? Yeah, one of the titles we launched got the Steam top-grossing one just for a day or two days. So how much you make for the game? That's I cannot tell. Because we partnered with Square Enix. So the publisher was them. But I think many people want to know real, right? So if you become number one on to the Steam, how much you can make a day? So I cannot tell the exact number, but I can tell it took just almost one year to develop. And it's very hard to recover. And so what about Gumi? Yeah, so for us, we are a mobile gaming company. But in these two years, I put so many efforts to the VR and the AR spaces. So two years ago, I start Tokyo VR startup. That's VR, AI-focused incubation program. Maybe first in Asia. And then later, I start Seoul VR startups. And then also in here, Nordic VR startups with Nordic's film. And then also, we start, we are the GP of VR fund. And then also, we put LP onto the presence fund. So you're super active. Yeah. You have your hands in many pots. Yeah, so in two years, I put so many efforts and also so many money, right? So right now, my board member and also shareholder is always asking me, like, when the VR is coming, right? But always, my answer is the same. Believe. But so far, I think hardware is an issue, right? So like two years ago, head mount display is so expensive. Cost, including the PC, like $2,000. That's too expensive, right? But currently, most of the headset is prices going down. So I think market size is growing. So I have big confidence onto the future of VR and AR. So do you guys, I mean, now you both have kind of real numbers from where you originally started from to now. Do you think you actually timed the market correctly? Or do you feel that you were too early? No, I think, yeah, we are good timing. Because now we can get a lot of expertise and knowledge. And also, we are investing a lot of startups. That's what we could do because we started earlier. So it's just good time to see how the actual market grows. Do you think it's possible today to be able to invest in a VR game or a company and actually see a return on that investment? In maybe the next two or three years, we can see a return. Yeah, so if we see the fact, last year, only on the Steam platform, eight titles, eight games, sales more than $1 million. And then this year, 18 titles, sales more than $1 million. And then including the Oculus and also PlayStation, 30 titles, sales more than $1 million. It's not monthly, it's accumulated, right? Yeah, accumulated. But you know, what surprises, like job simulator or road data, that title, the sales is still climbing. So the meaning is when user is growing and then they buy the title, right? So if only the PC game, if that game is sales and next year sales is zero, right? But still, market is growing. So top title, user keep buying. So I think now is a very good time to join in the market. And which aspect of VR would you focus on? If you're giving, potentially a lot of folks here who are interested in participating in the space, there's mobile VR with Daydream and the Samsung Gear VR and then there's console VR, there's a PlayStation VR, Microsoft is probably gonna do something there. And at the high end, there's window holographic, Oculus Rift and Vive. So given those kind of three independent segments, you know, where do you think the heat is right now if you were to start investing or building a game today? Yeah, we have two focus. The one is location based high end VR games. So we usually use the HTC Vive to actually develop the game on the PC at high end VR and then install into the real location. So we have two VR entertainment space in Tokyo. And it's operating well and making profit. And also the second focus is mobile. So for the mobile, we're focusing more casual and online multiplayer experience so that we can grow more user base. And maybe they don't pay a lot for users, but we can grow the user base. So those high end location based and casual mobile multiplayer, that's our two focus. But what do you think, you know, mobile? So yeah, I do believe, you know, location based game is, you know, works. But you know, mobile VR experience is, you know, so poor, right? Just user is, you know, winning the team by that. Yeah, we can optimize the experience for mobile. So you don't need to have position tracking, just, you know, view point, pointing view and some three of controller. So we can design games so that it can be fit for the mobile. And so there's two things I want to touch on there. First is you mentioned the VR arcades that you're operating in Tokyo are profitable. Yeah, it's possible. So what does that experience look like? Because I think potentially a lot of people haven't been to one of those yet because those are fairly new. So can you maybe just describe like how the business of that works? Yeah, how the location works is that we have one floor of the building in the center of Sibuya and there are 10 experiences, 10 VR experiences installed in the floor. And then we don't charge by, you know, play, per play. We charge per time. So basically the ones, the player got into the space, they have 75 minutes and then they pay 20 bucks or 30 bucks and then they can play in anything for any time within the 75 minutes. So that model works. So one of the things that we've been seeing a lot of is that a lot of these location-based services and just given that the current fragile nature of VR is that you need a lot of people to basically operate these boots, right? So the overhead from all the staff is really high. Has that been true in your case? Are you seeing, have you guys done things to actually make that more effective? Is there like something that's working? Yeah, so we have, you know, so VR startups, right? So in the soul is very popular to the internet cafe. So they used to play a PC game on 2D cafes. So they have, you know, so many internet cafes. So most of many of the startup is, you know, focusing on that. And then one company, they are making the chair. So the problem of the location is, you know, they need a sensor and, you know, code, right? So they need a big spaces. But, you know, if, you know, they have, you know, some chair and then just, you know, can move around this and that. Only, you know, space is, you know, here, right? So yeah, for that is, you know, make space, you know, more efficient. For the VR arcade space we have in Tokyo, we have a lot of people. I mean, those cast, they help people, they help players to enjoy the experience. And also I think those people operation is part of experience. They are very good at to, you know, make the customer enjoy. So that's the one model. And also the second model we are now trying is the partner with the shopping mall chain, biggest shopping mall chain in Japan. Now we made the three type of the VR games, which is operation free. So which is very easy to use and also doesn't require any support stuff. And then we will install those three games into the 300 locations around Japan. So that's why we are now trying. And we did location test and it went well. And then we are rolling out gradually in the next several months. So we will see how it goes. That's how the operation free VR experience will work. So I have a question for both of you. I don't know if you can share your opinion first. Is, so we've talked a lot about like kind of look, there's three different models here, right? Have been discussed. One is location-based where it's kind of time-based. Then there's this downloadable software which you're seeing on Steam. But both of your companies are known for free-to-play mobile games, right? So when are we gonna see kind of free-to-play be a real business model for VR? Perhaps you could start. But I think for the VR free-to-play doesn't work. That's because right now at this moment user base is too little, right? So for the mobile game, there is tons of the user base, right? So that's why free-to-play works. So if you know we, yeah, we all was in the mobile gaming business, right? So if you think about like 2007 when the iPhone has come, most of the title is premium, right? So even the Angry Bird where those title is premium, that's because user base is too little, but eventually user base is climbing. And then free-to-play is coming, right? So I think VR is also similar way. So start from premium, and then when headset is more, and then become free-to-play. Is it? Yeah, I have a similar hypothesis. Actually we are launching the free-to-play mobile VR game this month. So we're trying to see how it will happen. Well, we look forward, please write a blog post so you can actually eliminate us on how that goes. So I have a slightly different view. I think that even with the user base, one of the problems that we're seeing with VR today is that it's really hard to get in and out of the experience quickly. And if you think about mobile games, it's about daily, basically daily engagement, right? But I think, and I'll probably ask you, how often do you both use VR? Not much, yeah, a few days a week. A few days a week, that's still higher than most, and similar? Yeah, similar, but that's maybe not fair questions. So we have to compare VR with PlayStation 4 or Xbox. So I only play PlayStation 4 at the weekend, similar with VR. So I think as a game, VR is competing against PC game or like PlayStation 4, not competing against mobile. But do you think there's a time when we're gonna start to use VR much more regularly? And if so, what needs to happen to the hardware or what needs to happen to the platforms in order to enable that sort of, both for gaming and for non-gaming applications? Yeah, we need to wait for the grass type headset. Yeah, so for my opinion is we all have maybe same opinions, so we call VR and AL and MR and they total with XR, right? So complicated thinking. But VR is totally in the VR spaces, right? So that's not day-to-day use case. So for the AL is next to smartphone, right? So I think VR is not going to be like smartphones, but AL does. So I mean, you're both heavily based in Asia. Do you think that, this is an audience question, do you think that the Asian market is actually ahead of the Western market in terms of VR and AR mass commercialization? At least, relating to the location-based, Asian, some of the Asian countries have advantage because in Japan, we still have game centers, arcade game centers which basically extinct in Western world. We have all still. And also, as Kunimitsu-san said, in Korea or China, there are lots of intended cafes. So that infrastructure is advantage. So you think we should keep an eye on Japan to see, and then basically see what's working there and then bring that to the Asian country? Yeah, some of them, it will work because I've been telling about the location-based VR from two years ago. And then at that time, nobody from the Western world said about that. But now, Western startups and VR industry people, they talk about location-based VR a lot. Yeah, so the Void just did a partnership with Disney to bring Star Wars to Disneyland. So that just opened up in LA recently. And IMAX is also getting really deep into VR as well. And they're starting to open up VR centers in the West. So we're definitely seeing that. And I had a very similar experience where I visited China two years ago. And there was VR arcade machinery everywhere, but we hadn't seen any of it yet in the West. Yeah, so in here, what I really want to say is, now is really good timing to join in the VR. And then especially if here, like Nordic countries, if I start my own startup, yeah, I do game and entertainment. That's because in this world, in this area, it's so weird. I do LP investment to you guys. And also, we have a fund in the Silicon Valley, right? But most of the VC, Silicon Valley, like VC, they don't like content, they don't like game. They only invest it to the tool or platform, right? But just think, users only care about content, game, experience, right? So no user care about platform or contents creation tool. So for the VR, what we need is good content. But no US startup is making that. But somebody have to make good content, otherwise VR is not come up, right? So let me ask you a hard question then, right? Which is, we talked a little bit about the return on the investment in this content. How, and also the fact that maybe it's a two to three year horizon before we start to see kind of mass market adoption. So how do you overcome that, both that funding gap and that timing gap? Yeah, so I think we've seen, for the gaming industry, we've seen, like 2008 or nine, many people say mobile, no one play the game on to the mobile, right? But after Angry Bird is come, and then crash of clown, or so one game, changing everything, right? So I think so far, what need for the VR is two things. One is cheap, high-end, standalone, HMD, et cetera. When do you think that's coming? End of next year to early next year. So Oculus is already announced like Santa Cruz, right? So Oculus, that's a pretty big, so I'm with you on this, is that standalone VR is kind of a game changer for the user experience, right? Because you basically, you put it on, you're in VR, you have a native interface. Oculus, for those that don't know, they announced this thing called the Santa Cruz prototype, which is effectively a fully contained computer and screen that's able to track your hands and track your movement in space. So effectively, it's an Oculus Rift plus touch controllers fully contained. So you can imagine that you get the experience of having high-end PC VR, but in a standalone device. Yeah, and then many people is saying the price is going to less than 500, right? Then the price is the same as PlayStation 4 when that come up, right? So end of next year, hardware is good enough. So what we need is good content, right? So in Japan, what do you know everybody was surprised is, no one thinks Nintendo Switch success. That's because many people say no content, only Zelda, right? But result is everybody buy Nintendo Switch. That's because of Zelda. So only one content is enough to user to buy. So yeah, end of next year, hardware is come. So what we need is content, right? So I think maybe here many people try to start up, right? So for the start up is very good timing. Like 10 years ago, Rovio is a tiny company, right? And the Supercell is also small and they also ask. I do think there's an opportunity to basically be early. So I mean, that's one of the things is, I was very early on social platforms. You guys were early on mobile. And we found that when you're working with the platform owners at an early stage, they're willing to work with you in terms of funding, in terms of distribution. So there is that advantage. I still think that's there because these platforms haven't yet been established. But as soon as you're two years down and it's easy for people to start getting users on these platforms, they're going to actually turn down the amount that they're helping you. So we only have a few minutes left. So I want to kind of switch gears a little bit to actually talk about non-gaming VR applications. What are some of the things that you guys have seen kind of outside of gaming that have excited you? Maybe some investments you've made. And I'd love to hear kind of about outside of gaming, what you're doing. Yeah, we've invested several of the VRAR companies in non-gaming space. And then the listening to the hot, one of the hot areas is the training. So the, you know, the enterprise like manufacturer or, you know, the airplane makers or car makers, they have invested a lot in training and simulation. And the VRAR can replace some of them by for very cheap. So they're investing those area. And also we've invested in several startups working in the space. So that's kind of interesting now. What have you guys done outside of gaming? Platform and contention tool. But you know, that's, you know, you guys like that, right? So you guys, you know, invest into those area, I invest into your entertainment area. Got it. So, you know, we, this is actually our focus area. We do a lot of stuff outside of gaming. And I'll go on record as saying that I think potentially the first billion dollar VR software company is going to be a training company. You know, we've seen stuff, we have like four or five different companies now using VR for to help people basically pick up new skills. So for example, one that is really interesting is like a sports training that they were using for like the NFL and the NHL to train the athletes. But now they took that same technology and they've gone to Walmart. And now Walmart's using them for training their greeters during Black Friday. I'm sure people have heard of American Black Fridays. They're kind of notorious. So instead of actually having to experience that for the first time in the store, you first experience in VR, which sounds actually kind of scary if you think about it. It's like maybe a bad use of VR, but it gives people that idea of that spatial awareness and that understanding of a situation before you ever actually experience in the real world. So I 100% agree with you that training, I think is a really hot area. What about AR? Are you guys doing any work in AR right now? Yeah, AR is similar. Are we investing in the company which is making a solution for training slash kind of teaching the appliance maintenance? So basically there are lots of tens of millions of operators around the US. For example, they go to each residence to fix the Comcast setup box. And then they need to train beforehand to go to those homes to fix those appliances. And then there are tons of types of the setup box. So they have to learn a lot of manuals. But with the AR solution, just they can go to the home and then they see the setup box through the glasses. And then this video is streamed to the control center and then very trained supervisor can tell those operators, okay, so this setup box is now broken and just connect this cable or switch off this one. So it's basically remote assistance for technicians. This is also, I think, a really big, I think the implications of this aren't yet apparent that this changes the nature of work, right? You can go and do a job without ever having seen a device before. So if you go to like, I've heard stories of a technician who basically would go to like an aircraft engine and could follow the steps of like put a wrench here, take this bolt out, do this like, it's basically paint by numbers and you're able to do something that's highly technical that you may have never seen on a machinery you've never seen before and like do the job. So in some ways it's like, instead of robots replacing humans, it's that the humans are now the hands for the AI or for the software, right? I think that would be cheaper than making a robot. Yeah, I know in a lot of ways, yeah. So it can change those labor market. So yeah, for the AI, right? So I think many people, everybody watching out the AI, so for future of the AI, it's your next smartphone. So yeah, we do believe from now, 10 years, no one is watching this, right? Next smartphone, this is so tiny and annoying, right? So a future's UI is, we all know, like Iron Man or Dragon Ball, like all AI is connected to the internet and then here is a monitor, right? So Apple is announced so important things. This year they announced AI kit that's using normal camera and then tracking that position, right? And then next year, they are going to be put AI cloud. And then also next year or next next year, they are going to be put depth camera onto the, now it's only the front, but you know, back end. That's going to be 2019, right? And then 2020, AI glasses come. So I think post smartphone is coming very soon and then Apple is making that, right? So that's a pretty great place to actually end it, right? Because so basically the prediction here is 2019 AI glasses gonna replace a smartphone. Yep. So do you agree with that? Yep, it's coming. I think it's there too, but you know, we'll see. Hopefully we're right, because it really is a game changer. All right guys, we're out of time. Thank you so much for having us. Thank you. Thank you.