After years of stagnation, Japan’s reunification with Web3, a new phase of the Internet built around decentralized blockchain technologies, the metaverse and non-fungible tokens (NFTs), has taken off, albeit with regulatory changes and tax updates. a growing sense of momentum is needed to drive real progress.
That was the main message emerging from blockchain-related events at the NexTech Week trade show, which wrapped up Friday after a three-day run at the Big Sight conference venue in central Tokyo.
One of the blockchain developers present at the event was Sébastien Guillemot, co-founder of Web3 game engine Paima Studios.
He spoke Forecast on the opportunities and challenges of developing Web3 games, providing timely advice to any foreign companies looking to expand in Japan at a time when Prime Minister Fumio Kishida’s government is actively promoting the industry.
Q&A edited for clarity and length.
Forecast: Can you tell me a little bit about Paima Studios and your work there?
Sebastian Guillemot. We are a framework for building application-specific layer tools that are optimized for games and gaming use cases. What we have seen is that there are many people who want to create online games. But it’s really hard because you need a lot of NFTs to build a chain game. You need NFTs for characters, items, levels and it ends up being very expensive.
So we’ve created a framework to produce custom app games. It is similar to the NFT compression protocol. You can connect a single NFT to Layer 1 that represents a user’s account and then bind the data inside that account, such as their wins, losses, items, history, etc., to Layer 2.
Forecast: You are personally based here in Tokyo and Paima does a lot of work with Japanese companies. So why Japan?
Guillemot: It is a good question. I think there are a lot of projects in Japan that specifically want to move into games and gamification. Additionally, a number of Japanese gaming companies such as Bandai Namco, Sega, and Square Enix have announced their intention to move into the blockchain gaming space. So there’s quite a lot of interest in games in Japan, as well as interest from larger game companies to move to Web3.
Then, on top of that, the Japanese government is really actively promoting blockchain use cases, saying that Japan wants to be a leader in Web3. Many Japanese companies are taking this as a sign to move into gamification or gamification, commemorating NFTs and other similar use cases that are game-like. These companies can create really great experiences really fast in just a few days. At Paima, we work with these companies to bring their use cases to life.
Forecast: Especially compared to crypto-friendly places like Singapore and Dubai, how are the business conditions here for non-Japanese entrepreneurs and developers?
Guillemot: The main thing to consider at this point is that there are still many regulations in Japan that are not yet in place. Many tax measures also do not work. So the tax situation is not good and the regulations remain really strict. The government has announced plans to change its regulations to make Japan more Web3 friendly. So we’re at a stage where a lot of companies are trying to guess what government regulation is going to be and position their company for the new environment that’s emerging.
So if you’re interested in doing something in Japan, look at what the big companies are doing, where they’re putting their efforts, because they have the best idea of how the rules might change. And also keep an eye on the regulatory environment and how it evolves over the next 20 months. The Japanese government continues to release new press releases and white papers outlining the changes they are planning. So it’s best to keep an eye on those announcements to see what business opportunities might be in store for you.
Forecast: And how do events like NexTech Week help advance the Web3 space?
Guillemot: Japan’s blockchain and Web3 are actually quite small, relatively speaking. It’s a pretty tight community. So this is a great event to meet all the other players in the blockchain space, talk to them about what we’re all doing and build a really tight community to tackle Web3 adoption together.
It’s a very competitive environment in the US, especially in the global arena. There are so many English speakers out there that when there’s a potential new way to differentiate your product, everyone just claws at it in an attempt to get away from the competition.
Japan is different in that the community is smaller and so it’s all about working together and building the community together. And you can see it at these events where everyone is getting to know each other and seeing what synergies there can be.
Forecast: Finally, can Japan take that next step to become a competitive global hub for Web3?
Guillemot: Yeah, I think a lot of things go into making that happen. Obviously, Japan is one of the biggest markets in the world. It has one of the highest GDP per capita countries in the world. And it also has some of the most recognizable brands, not just in gaming, but just brands in general.
If Japan can really take the bull by the horns and bring all these brands into the global environment through blockchain, it has huge potential to become one of the leading countries in the Web3 space.