Hello Kitty Turns 50: Inside Sanrio's XR Strategy and How They Charm the Virtual World with Kawaii

How popular is Sanrio in Taiwan? There's probably no need for an introduction. From a variety of co-branded merchandise to capsule toys, the adorable images of Sanrio characters have long been ingrained in people's hearts, establishing a dominant position in Japan's "kawaii" culture, which has also captivated the Taiwanese audience.

This year, invited by the Kaohsiung Film Festival, I participated in the Immersive Exhibition XR DREAMLAND, where I not only watched many outstanding VR works but also attended several interesting industry forums. Among them, the "XR Festival Asia × Sanrio Virtual Music Festival" forum was particularly eye-catching, highlighting Sanrio's innovative approach to virtual experiences.

On the occasion of Hello Kitty's 50th anniversary, Sanrio, established Hello Kitty in 1960 and boasting over half a century of history, ventured from the physical realm into the virtual world three years ago. They not only moved Sanrio Puroland into the VR social platform VRChat, exploring the metaverse that other established companies hesitate to try but also announced ongoing collaborations with VTubers. This strategy is quite intriguing—what exactly is it all about?

Mr. Hiroki Watanabe, Manager of Sanrio's XR Business Department, introducing Sanrio's virtual projects at the forum.

Embracing the Virtual: Sanrio's Transformation Journey

Sanrio collaborated with Tokyo's Beyond the Frame Film Festival, Bucheon International Fantastic Film Festival, Kaohsiung Film Festival, and SandBox Immersive Festival to organize a VRChat project competition, inviting creators from across Asia to submit their entries. Film festivals from various countries recommended local XR creators, fostering regional creative exchanges. At the Kaohsiung Film Festival's industry forum, four panelists not only shared insights about the judging process and brainstorming challenges but also demonstrated Sanrio's determination to collaborating with major Asian immersive film festivals. They also explained their hope to extend and pass on Sanrio's business philosophy and ideals through the virtual world.

As a Sanrio fan who attended the SANRIO Virtual Festival in the past two years, I was fortunate to interview Mr. Hiroki Watanabe, Manager of Sanrio's XR Business Department, after the forum. "Well... I don't think our company is a pioneer, but we are very willing to embrace various challenges," Mr. Watanabe modestly said during the interview. However, just moments before, he had been enthusiastically sharing the efforts Sanrio has made in XR and virtual amusement park experiences.

Mr. Watanabe earnestly sharing Sanrio's strategies in the virtual domain.

In 2020, 31-year-old Tomokuni Tsuji took over as the president and CEO of Sanrio, succeeding his grandfather Shintaro Tsuji, the founder and honorary chairman, becoming the second-generation successor. Under the leadership of the new generation, Sanrio embarked on a digital transformation journey that all established companies must face.

Speaking of digital transformation, it's practically like starting a second business. They not only produced new image videos and launched a major TV advertising campaign with the slogan "Let's laugh, together." They also gave the devilish character Kuromi her own YouTube channel, launching the "KUROMify the World Project" and making her the protagonist of a new animated series. Her unique charm quickly went viral on social media, capturing the hearts of Generation Z.

Physical Limitations Pave the Way for New Possibilities

However, one of the most unexpected major attempts was the "Sanrio Virtual Festival" held on the virtual social platform VRChat. When it first took place in 2021, it was just a two-day music event (though it featured big names like Kizuna AI and Hatsune Miku). By 2024, it had evolved into a month-long event, even adding seasonal bonuses at the audience's request, becoming a large-scale virtual amusement park.

The upgraded "Sanrio Virtual Festival" features three major stages, various interactive experiences, and Sanrio character parades, allowing participants to experience the full festive atmosphere of Sanrio without geographical or device restrictions. If you have a VR headset, it's even better—you can feel as though you've traveled to Japan's "Sanrio Puroland" from the comfort of your home.

The physical Sanrio Puroland and the Sanrio Virtual Festival are practically perfect replicas.

This made me very curious about how Sanrio came up with this idea. Was it in response to the pandemic affecting the operations of physical amusement parks?

"Actually, no," Mr. Watanabe said straightforwardly. "The physical 'Sanrio Puroland' was established in 1990, and next year will be the park's 35th anniversary. However, we felt its limitations. The advantage of an indoor theme park is that visitors can enjoy themselves regardless of rain, cold, or hot weather. But conversely, because it is an indoor venue, it is difficult to add new attractions. We really wanted to try something new to take the next step in our theme park business. So, what if we were in a virtual world? We can do anything we wanted, right? That was our original intention for creating the 'Sanrio Virtual Festival.'

A cool photo of the Sanrio boy band “Hapidanbui” taken at this year's Sanrio Virtual Festival.

However, Mr. Watanabe also acknowledged that the pandemic did play a role in making the 'Sanrio Virtual Festival' more well-known. Originally targeting the local Japanese market, it unexpectedly attracted many VRChat users from Europe and America.

Sanrio and Independent Creators: A Path of Co-Creation

Creating a month-long virtual music festival bustling with activity is not as easy as one might imagine. Even for a large company like Sanrio, it's not possible to go it alone. Their strategy involves collaborating with many independent creators who are already familiar with the culture and language of VRChat.

"We are truly grateful to the creators who have worked with us. These creators then invite new collaborators, allowing this collaborative relationship to continue to develop," Mr. Watanabe explained. With this approach, creativity may not be a problem—the world is not short of more imaginative ideas. The challenge lies in maintaining the original spirit while innovating.

VRChat's VR experience works also toured at Kaohsiung's XR DREAMLAND.

In addition to maintaining a "friendly" tone for Sanrio characters, practical operations involve many guidelines that need to be followed. After all, conveying "cuteness" doesn't happen by accident. These are the details that need attention.

As you can see, even with many "traditions" and limitations, Sanrio still seeks to forge new paths, continuously extending olive branches to creators, such as hosting online submission events, establishing the creator platform "Charaforio," or their purpose for this visit to the Kaohsiung Film Festival, which is to connect with more Asian creators.

Sanrio's creator content platform established this year, connecting virtual IPs and fans. (Source: SANRIO)

Through these strategies, Sanrio has not only successfully extended its "cute" brand image into the virtual world but more importantly, they have spread joy and smiles to every corner of the globe. Regardless of borders and distances, through co-creation with creators in the virtual world, Sanrio has reinterpreted the vision of "One World, Connecting Smiles." And this is just the beginning.

At the end of the interview, I couldn't help but ask Mr. Watanabe if he had a favorite Sanrio character. You might think he would give a diplomatic answer: "Each one is my favorite." But that's not the case. He candidly said he likes the boy characters in Sanrio, such as Tuxedo Sam, Badtz-Maru, and Pekkle Duck. But why?

"When I was in college, I worked at Sanrio Puroland, and once, a visitor told me I looked like Badtz-Maru. I think it was because our eyes looked similar. From then on, I naturally started paying attention to Badtz-Maru, and that's why I like him," he said with a smile. This also reminded me of the counter staff I met at this year's Sanrio Virtual Festival, who was outfitted as Badtz-Maru. Hey? Could it be that he was Mr. Watanabe?

Bringing out the photo taken with Badtz-Maru at the time.