The Generative AI Market

Generative AI refers to unsupervised and semi-supervised machine learning algorithms that enable computers to use existing content such as text, audio and video files, images, and even code to create new, organic content, such as marketing mail, social media advertisements, legal contracts, and musical symphonies. Generative AI uses deep learning to build models from a given training data set. These models are trained to recognize patterns in the data and then generate new data based on those patterns. The growth of the market can be attributed to the innovation of cloud storage, enabling easy access to data, the evolution of AI and deep learning, and the rise in content creation and creative applications

Generative ai Market size, 2023-2030

The figure above depicts the global generative AI market between 2023 and 2028. According to MarketsandMarkets, the generative AI market is estimated to be USD 11.3 billion in 2023 and is projected to reach USD 51.8 billion by 2028, at a Compound Annual Growth Rate (CAGR) of 35.6% during the forecast period. The market is growing and possesses huge potential over the next decade. Companies heavily invest in generative AI solutions and services to support the ecosystem. The opportunities in adjacent markets, such as chatbot and conversational AI, open new revenue prospects for the generative AI market. MarketsandMarkets estimates that the revenue shall reach USD 75-85 billion by 2030.

Generative AI Market outlook in Japan

Japan has witnessed a significant adoption of AI technology in the past years. Key factors driving Japan’s growth in generative AI include the evolution of AI and deep learning, and the rise in content creation and creative applications. Japan is the third largest country in the Asia Pacific region in the generative AI market, and slated to generate USD 2.8 billion in revenue in 2028, growing at a CAGR of 41.9% during the forecast period 2023–2028. 

Japan has a strong base of technologically advanced industries with a first-mover advantage in innovative markets. The Innovation Hub Japan (i2.JP) is an open innovation initiative that connects healthcare professionals, local governments, academia, and private companies, designed to jointly work out collective and practical optimal answers toward the solution of issues in the healthcare field. i2.JP was established in 2018 by AstraZeneca, with the support of the Japanese government. The hub is in Tokyo and has a network of over 100 partners, including pharmaceutical companies, hospitals, research institutes, and startups. Mitsui & Co., Ltd., one of Japan’s most prominent business conglomerates, has collaborated with NVIDIA on Tokyo-1, an initiative to supercharge the nation’s pharmaceutical leaders with technology, including high-resolution molecular dynamics simulations and generative AI models for drug discovery. Announced at the NVIDIA GTC global AI conference, the Tokyo-1 project features an NVIDIA DGX AI supercomputer that will be accessible to Japan’s pharma companies and startups. The effort is poised to accelerate Japan’s USD 100 billion pharma industry, the world’s third largest, following the US and China. 

The rapid progress of Japanese generative AI is a sign of the country’s commitment to the field. As generative AI continues to develop, Japan will likely play a leading role in its application to various industries In healthcare, generative AI is being used to develop new drugs and treatments for diseases. For example, the Japanese company Takeda Pharmaceutical Company is using generative AI to design new cancer drugs. Interprotein is a Japanese company that is using generative AI to design new molecules that could be used to treat cancer. The company’s AI system is trained on a massive dataset of known molecules, and it can use this data to generate new molecules that have the potential to be more effective than existing treatments. Interprotein has already used its AI system to design several new molecules that are currently in clinical trials. One of the most notable advancements is the development of the DeepMind AlphaFold protein folding model. AlphaFold is a machine learning model that can predict the 3D structure of proteins from their amino acid sequence. This breakthrough has the potential to revolutionize the field of biology, as it could be used to design new drugs and treatments for diseases. In addition to these major advancements, 

In finance, Mizuho Bank is a Japanese bank that is using generative AI to detect signs of fraud in credit card transactions. The bank’s AI system is trained on a massive dataset of historical credit card transactions, and it can use this data to identify patterns that are associated with fraud. Mizuho Bank has already used its AI system to successfully detect several fraudulent transactions.

Within the automotive sector, Toyota is a Japanese automaker that is using generative AI to design new car parts. The company’s AI system is trained on a massive dataset of existing car parts, and it can use this data to generate new designs that are more efficient and lightweight. Toyota has already used its AI system to design several new car parts that are currently in production.

Japan is also making progress in several other areas of generative AI. For example, researchers at the University of Tokyo have developed a new method for generating images from text descriptions that can be used to create realistic images for use in movies, video games, and other applications.

1. software segment to ACCOUNT for the largest market size during
   the forecast period

Source: Press Releases, Investor Presentations, Interviews with Experts, and MarketsandMarkets Analysis

Based on offering, the generative AI market is divided into two categories: software and services. The software segment is expected to garner a higher revenue during the forecast period and reach USD 42.5 billion by 2028 from USD 9.7 billion in 2023, at a CAGR of 34.5%. The growing importance of generative AI software among creative professionals to develop models for image and video generation, style transfer, and text-to-image synthesis to enhance customer experience is expected to drive the demand for generative AI software. The services segment is projected to witness a higher growth rate during the forecast period. The growth can be attributed to the increasing requirement for technical expertise, such as product upgradation, maintenance, training, and consulting, which plays an important role during and after the implementation of generative AI software.

Natural language generation to ACCOUNT for the largest market size during the forecast period

The computer vision segment is expected to garner a higher revenue during the forecast period and is projected to reach USD 8.2 billion by 2028 from USD 1.9 billion in 2023, at a CAGR of 32.8% during the forecast period. The growth of computer vision in generative AI is driven by the increasing demand for intelligent automation and decision-making capabilities in various industries, such as healthcare, automotive, and retail.

Media and entertainment vertical to hold the LARGEst market sIZE during the forecast period

 The BFSI segment was an early adopter of generative AI solutions and services; this segment is expected to continue to account for a high market share. Retail & e-commerce sector enterprises principally use generative AI solutions to enhance brand awareness and global reach. Generative AI chatbots are being used by banks and other financial institutions to provide customer service, answer questions, and complete transactions. For instance, Mizuho Bank in Japan, has developed a chatbot called Mizuho Chatbot that can answer customer questions about banking products and services.

PROMINENT END USERS IN GENERATIVE AI MARKET

Media & Entertainment – Generative AI is enabling media & entertainment companies to create compelling and unique content faster and more efficiently than traditional methods. For instance, generative AI is being used to create virtual sets and characters for films and TV shows, which can save time and money on production costs. In the music industry, generative AI is being used to create new and innovative sounds and styles. In gaming, it is being used to generate game worlds and characters in real-time, providing players with a more immersive experience. In advertising, generative AI is being used to create personalized and targeted content that resonates with specific audiences.

BFSI: – Chatbots are one of the most popular applications of generative AI in the BFSI sector. They can be used to provide customer support, answer questions, and even sell products. For example, in Japan Mizuho Bank has developed a chatbot called Mizuho Chatbot that can answer customer questions about banking products and services. Virtual assistants are another popular application of generative AI in the BFSI sector. They can be used to help customers with tasks such as managing their finances, setting up appointments, and making payments. For example, SBI Sumitomo Mitsui Banking Corporation has developed a virtual assistant called Sumitomo Mitsui Banking Corporation Virtual Assistant that can help customers with a variety of banking tasks.

Healthcare: In the drug discovery sector, generative AI is being used to accelerate the process of finding new drugs. For example, the company Insilico Medicine is using generative AI to design new molecules that could be used to treat cancer. Insilico Medicine has already identified several promising new molecules, and it is currently working to bring them to clinical trials. In the medical imaging sector, generative AI is being used to improve the accuracy of diagnoses. For example, the company Zebra Medical Vision is using generative AI to develop algorithms that can automatically detect cancer in medical images. Zebra Medical Vision’s algorithms have been shown to be as accurate as human radiologists, and they are being used by hospitals around the world. Another Japanese company PatientsLikeMe is using generative AI to create personalized treatment plans for patients with chronic diseases. PatientsLikeMe’s platform allows patients to share their data with each other and with researchers, which helps to identify patterns that can be used to improve treatment.

FUTURE OUTLOOK

The generative AI vendors are witnessing new revenue prospects from the opportunities in adjacent markets, such as chatbot and conversational AI. The following table includes market sizes and compounds annual growth rates of such adjacent markets.

1. Market size and growth rates of adjacent markets

Source: Secondary Research, Interviews with Experts, and MarketsandMarkets Analysis

The developments in these technology markets are boosting the growth of the chatbot and conversational AI market in Japan. Rakuten AI Chatbot, a chatbot that can be used for a variety of purposes, such as customer service, sales, and marketing, is powered by Rakuten’s own AI technology, and is able to learn and adapt the way that users interact with it. LINE Clova, a conversational AI platform can be used to create chatbots, virtual assistants, and other AI-powered applications. It is powered by LINE’s own AI technology, and is able to understand and respond to natural language. These are just a few examples of the many chatbot and conversational AI technologies that are available in Japan.