Japan Generative AI Market Size, Share & Trends Analysis Report By Component (Software, Services), By Technology, By End-use, By Application, By Model, And Segment Forecasts, 2024 - 2030

Japan Generative AI Market Size & Trends

The Japan generative AI market size was estimated at USD 917.2 million in 2023 and is expected to grow at a compound annual growth rate (CAGR) of 37.5% from 2024 to 2030. Generative artificial intelligence defines algorithms that can be used to create new content, including code, text, images, audio, videos, and simulations. Automating time-consuming and repetitive tasks is fueling the growth of generative AI in the region. Generative AI enables employees to reclaim time previously spent on such tasks, allowing them to focus on more creative and complex endeavors. By analyzing unstructured data, facilitating decision-making processes, and optimizing workflows, this technology enhances productivity and minimizes the risk of errors.

Japan's aging population and labor shortages have increased interest in automation and AI-driven solutions across various industries. Generative AI offers promising opportunities for addressing workforce challenges by automating repetitive tasks and enhancing productivity. Japanese companies increasingly leverage generative AI to streamline operations, improve efficiency, and deliver innovative products and services in the manufacturing, healthcare, and customer service sectors. According to statistics by Nippon, Japan has the highest geriatric population ratio in the world, with 29.1% of its people over 65 years old. There were 36.27 million people over the age of 65 in the year 2022. In addition, the World Economic Forum's Future of Jobs Report 2023 states that only 35% of Japan's companies prioritize workers over 55, thus driving the growth of the generative AI market in the country.

Additionally, government support and strategic initiatives have significantly driven the growth of generative AI in Japan. The Japanese government has prioritized AI research and development as part of its national economic growth and technological leadership strategy. Through funding programs, partnerships with industry and academia, and regulatory frameworks that promote innovation, Japan aims to capitalize on the potential of generative AI to drive economic growth, address societal challenges, and enhance global competitiveness. For instance, in February 2023, the industry ministry of Japan provided more than USD 56 million to fund AI initiatives at seven organizations nationwide, including universities and start-up companies.

Furthermore, collaborations between industry, academia, and research institutions have accelerated advancements in generative AI technology in Japan. Leading universities and research centers collaborate closely with industry partners to conduct cutting-edge research, develop new algorithms, and commercialize innovative applications. These collaborations facilitate knowledge exchange, talent development, and technology transfer from academia to industry, fostering a vibrant ecosystem for generative AI innovation. For instance, in November 2023, Macquarie University and Fujitsu established the Fujitsu Macquarie AI Research Lab at Macquarie University. The partnership aims to focus on researching and developing promising applications of AI and associated technologies.

The Japan generative AI market trends include using AI, statistics, and probability to create computer-based representations of targeted variables based on previous input, observations, or datasets. Moreover, generative AI tools have experienced significant growth due to advancements in deep learning. The progress in deep learning techniques has enhanced the intelligence and capabilities of models, allowing them to undertake intricate tasks like image recognition, language translation, and content generation with remarkable precision and efficiency. Moreover, the demand for content and experiences that are personalized, relevant, and engaging has driven the growth of the generative AI sector.

The Japan generative AI gaming market is witnessing growth due to an increasing player base and diversification, which has created a demand for immersive and personalized gaming experiences. Generative AI conserves resources and time, thereby enriching gameplay, boosting game performance, offering personalized experiences to gamers, and fostering greater creativity among game developers. Moreover, the expanded accessibility of hardware and the progression of machine learning algorithms have facilitated the incorporation of AI functionalities, further shaping the ongoing development of gaming experiences in the country.

A growing need for creative and personalized content across diverse sectors fuels the rise of generative artificial intelligence (AI) in Japan. The technology empowers automatic content generation customized to specific preferences and requirements, from personalized product suggestions to customized artwork. In entertainment, advertising, and e-commerce industries, generative AI is pivotal in formulating immersive and captivating consumer interactions, ultimately fostering increased customer engagement and bolstering brand loyalty. Generative AI has become essential for enhancing customer experiences and driving business success in Japan's dynamic market landscape due to its ability to generate tailored content according to individual preferences and needs.

Moreover, integrating big data has been instrumental in fueling the growth of generative AI. The availability of large, diverse datasets has provided ample raw material for training generative models, enabling them to learn complex patterns and generate high-quality content. Companies and researchers in the country can leverage vast data repositories to train generative AI models, improving accuracy, scalability, and generalization.

Market Concentration & Characteristics

The Japan generative AI market growth stage is high, and the pace is accelerating. The market is characterized by an active and rapidly evolving landscape driven by technological advancements, diverse applications, and a supportive ecosystem. One prominent feature is the increasing adoption of generative AI across various industries, including finance, entertainment, healthcare, and more. The demand for innovative solutions in healthcare, such as medical image synthesis and drug discovery, boosted significant growth in the region.

Government initiatives and policies supporting AI development influence the growth of the generative artificial intelligence market in the region. Japan has implemented strategies to promote research, innovation, and the responsible use of AI technologies. These initiatives often include funding, collaborations, and regulatory frameworks between government bodies, industry, and academia. As governments actively engage in shaping the AI landscape, it contributes to a favorable environment for the growth of the generative AI market in the region, fostering innovation and cross-industry collaborations.

For instance, in December 2023, a group of researchers from the National Institutes for Quantum Science and Technology achieved a milestone by utilizing artificial intelligence technology to generate mental representations of objects and landscapes directly from human brain activity. Participants were presented with 1,200 images depicting various objects and landscapes during the study. Their brain signals in response to these images were then examined and measured using fMRI. Subsequently, these identical images were fed into the generative AI system to determine the correlation between the brain's activity patterns and the visual impulses.

The Japan generative AI market is developing and has a slightly concentrated nature, featuring several regional and global players. The market players are investing in research and development to develop advanced solutions and gain a competitive edge. Moreover, they are entering into mergers & acquisitions and partnerships as the market is characterized by rapid change, innovation, and disruption

Component Insights

Based on component, the market is further segmented into services and software. The software segment accounted for the largest revenue share of 65.0% in 2023 and is expected to continue to dominate the industry over the forecast period. The increasing awareness of the potential applications and benefits of generative AI software among businesses and consumers contributes to its rapid growth. As more companies recognize the value of generative AI in improving productivity, enhancing customer experiences, and driving innovation, the demand for generative AI software is expected to continue growing, fueling further market expansion.

The service segment is anticipated to witness the fastest CAGR during the forecast period. The segment growth can be attributed to the increasing concerns over fraud detection, risk factor modeling, data protection, and trading prediction. Cloud-based generative AI services are expected to gain popularity as they provide scalability, flexibility, and cost-effectiveness, fueling the segment's growth. For instance, in December 2023, NEC launched an AI business strategy that aims to create an ideal environment facilitative to leveraging customized generative artificial intelligence (AI) tailored to the specific needs of each customer's business. This environment revolves around a specialized model rooted in NEC's deep industry and business expertise.

Technology Insights

The market is segmented based on technology into transformers, Generative Adversarial Networks (GANs), diffusion networks, and variational auto-encoders. The transformers segment held the largest revenue share in 2023. The scalability and efficiency of transformers have contributed to their widespread adoption in Generative AI. Transformers can efficiently handle large amounts of data and scale to accommodate increasingly complex tasks and larger model sizes. This scalability enables the development of more powerful and sophisticated generative models capable of generating high-quality and coherent outputs across various domains, including text, images, and music.

The diffusion networks segment is expected to grow fastest during the forecast period. Image synthesis has become crucial for multiple industries, such as media & entertainment, healthcare, automotive & transportation, defense, BFSI, and many others. Technology has enabled these industries to fulfill the growing demands of image generation and provide high-value services to the government, businesses, and the public.

End-use Insights

Based on end-use, the market is segmented into media & entertainment, BFSI, IT & telecommunications, healthcare, automotive & transportation, and others. The other sub-segment is further divided into security, aerospace & defense. The media & entertainment segment accounted for the largest market share in 2023 and is projected to grow at a significant CAGR during the forecast period. The expansion of digital platforms and the rise of streaming services have fueled the need for scalable and cost-effective content production solutions. Generative AI offers automation and efficiency in content creation processes, enabling producers to generate vast amounts of high-quality content at a fraction of the time and cost compared to traditional methods.

The BFSI segment is expected to witness the fastest CAGR during the forecast period. It faces numerous challenges related to fraud detection, risk management, and compliance with regulatory requirements. Generative AI offers advanced analytics capabilities that enable financial institutions to identify fraudulent activities, assess credit risks, and ensure compliance with regulatory standards more effectively. By leveraging machine learning algorithms, anomaly detection techniques, and predictive modeling, BFSI organizations can detect suspicious patterns and anomalies in real time, mitigate risks, and enhance security across their operations.

Application Insights

The Natural Language Processing (NLP) segment dominated the market in 2023 and is projected to grow at a significant CAGR during the forecast period. Generative AI generates creative and personalized content in applications such as content creation, storytelling, and creative writing. Generative models can generate new text that imitates human-written content's style, tone, and structure by analyzing patterns in large amounts of text data. It enables businesses to automate content generation tasks, create personalized product recommendations and marketing messages, and develop interactive storytelling experiences that captivate and engage audiences.

The computer vision segment is anticipated to grow at the fastest CAGR during the forecast period. The automotive and transportation sectors are witnessing a growing embrace of computer vision systems. Additionally, generative AI techniques equip computers to understand and use visual data innovatively, including tasks like image inpainting, style transfer, and image-to-image translation. It broadens the scope for applications in various domains, such as digital content creation, medical imaging, autonomous vehicles, and surveillance systems, paving the way for new possibilities and advancements.

Model Insights

The large language model segment dominated the market in 2023 and is projected to grow at a significant CAGR over the forecast period. The exponential increase in available computational resources, particularly in the form of powerful graphics processing units (GPUs), tensor processing units (TPUs), and cloud computing infrastructure, are driving the adoption of large language models.

The multimodal generative model segment is expected to grow fastest during the forecast period. The expansion of the multimodal generative model category is propelled by its capacity to improve accuracy and resilience through the amalgamation of data from diverse modalities. This model class can elevate its efficacy by incorporating insights from multiple origins, which fuels its advancement within the domain. The sector focusing on image and video models is anticipated to grow substantially due to its ability to generate high-quality and realistic images and videos quickly. These outcomes, frequently challenging or unattainable via conventional means, stimulate widespread adoption and evolution of this model category.

Key Japan Generative AI Company Insights

Some of the key players operating in the market includePreferred Networks; Abeja; and Cinnamon

• Preferred Networks is a technology company focusing on developing practical applications of robotics, deep learning, and other advanced technologies. The company provides solutions for various sectors, including materials discovery, transportation, manufacturing, robotics, education, life sciences, plant optimization, and entertainment. The company's main services include developing algorithms, software frameworks, and hardware to support R&D.

• Abeja is a company that provides AI-based business solutions, including the ABEJA Platform. The platform offers image analysis, in-store marketing, and display optimization technologies and solutions. It helps execute digital transformation, including data collection, generation, processing, and analysis.

• LeapMind, Stockmark, and Studio Ousia are some of the other participants in the Japan generative AI market.

• LeapMind is a technology company that provides AI-based cognitive technology designed to make deep learning accessible across a broad spectrum of applications. The company's services include software frameworks, algorithms, and hardware that support research and development in various sectors, including robotics, education, manufacturing, plant optimization, life sciences, transportation, and entertainment.

• Studio Ousia specializes in advanced multilingual natural language processing software development. The company's offerings include a suite of artificial intelligence solutions developed upon its multilingual language processing framework, designed to help corporate customers with high volumes of text data.

Recent Developments

• For instance, in November 2023,Seven-Eleven Japan, a convenience store chain, implemented generative artificial intelligence to enhance its product planning processes, introducing a new and innovative approach to the retail industry. Such technology has mainly been utilized for selling products, but Seven-Eleven Japan's adoption demonstrates its potential for optimizing retail operations beyond sales.

• In April 2023, Mitsui, Japan, and NVIDIA launched a supercomputer, Tokyo-1, to boost Japan's USD 100 billion pharmaceutical industry. The initiative includes 16 NVIDIA DGX H100 AI systems, which are integral to NVIDIA's NGX enterprise AI platform. These systems develop AI models and manufacture high-resolution molecular dynamics to expedite the drug discovery process.

• In August 2023, Google launched the generative AI Search feature in Japan and India. The features include local language support, voice input, text and visual prompts, and a user-friendly interface.

Japan Generative AI Market Report Scope

Japan Generative AI Market Report Segmentation

This report forecasts revenue growth at country level and provides an analysis of the latest industry trends in each of the sub-segments from 2017 to 2030. For this study, Grand View Research has segmented the Japan generative AI marketreport based on component, technology, end-use, application, and model:

• Component Outlook (Revenue, USD Million, 2017 - 2030)

  • Software

  • Services

• Technology Outlook (Revenue, USD Million, 2017 - 2030)

  • Generative Adversarial Networks (GANs)

  • Transformers

  • Variational auto-encoders

  • Diffusion Networks

• End-use Outlook (Revenue, USD Million, 2017 - 2030)

  • Media & Entertainment

  • BFSI

  • IT & Telecommunication

  • Healthcare

  • Automotive & Transportation

  • Gaming

  • Others

• Application Outlook (Revenue, USD Million, 2017 - 2030)

  • Computer Vision

  • NLP

  • Robotics and Automation

  • Content Generation

  • Chatbots and Intelligent Virtual Assistants

  • Predictive Analytics

  • Others

• Model Outlook (Revenue, USD Million, 2017 - 2030)

  • Large Language models

  • Image & Video generative models

  • Multi-modal generative models

  • Others