The state of the VR Arcade industry
The modern industry of the VR arcade centers (outside Asia) is a little over two years old.
It's still an industry in diapers.
And for such a new industry, it's doing pretty well.
According to the largest survey of the sector * carried out to date, almost two thirds of the RV rooms are in a situation of equilibrium or better at the moment. This is very good news!
That said, many virtual reality rooms are in some difficulties.
They struggle to find the right combination of price, overhead, customer experience and content to be truly profitable.
Some RV centers are experiencing high utilization rates and ever-increasing profit margins.
And they are expanding to openings of new Virtual reality centers, while others are still struggling to find the tipping point.
I talk to the arcade operators VR every week and I'm surprised how hard everyone is working to solve it.
Part of the challenge is that in such a new industry, there is a serious lack of proven business models and very few real data.
Most RV arcades are making assumption-based decisions and looking at the prices and business models of other RV arcades.
We experience that firsthand every day.
When we started our first virtual reality store in December 2016, most of our business model was pure riddle.
In a whole new industry, there was no good data, to say almost none.
It took us months to lose money to start figuring out what we were doing wrong, what we did well and what needs the client had (not what we had in our heads).
The fight is real.
Virtual reality is a new technology, a new industry and a new business model.
It is well known that to remain relevant (and to be ahead when the prices of VR equipment fall), the virtual reality rooms are going to have to innovate and offer more immersive and exciting experiences.
Among the data from our platform, surveys and conversations with industry experts, I am optimistic that the VR Arcade will work pretty well and take a place in the "immersive ecosystem", both now and in the years ahead.
In the next 3-5 years I imagine we will see high-level immersion experiences outside the home as nomadic, Dreamscape, and the Void continue to develop. And of course better and more affordable immersion experiences for the home.
The question then is. . Is there room for an "average portion" of immersion experience that RV arcades could have?
Let's take the film industry as an example.
Thousands of movie screens around the world that can play the same content with a higher quality level than customers can experience at home.
The standard technology "drive" that makes this 39 billion-dollar industry work is a projector, a giant screen, high-quality audio and comfortable seating.
What would a standard "RV unit" be like for the virtual reality room industry?
People in the sector are still deliberating. But it might look like a treadmill, a haptic suit, high-end controllers, high-quality HMD and a top-line PC…. Think of Ready Player One's entire body immersion equipment.
And if the content creators had a standard "RV drive" to develop for…. They could create next-level content that would attract more people.
Simon revely from Figment Productions expressed it well: "We could make great RV movies, but we'll never pay for them if we don't have enough places to sell them. The Avengers cost 350 million, 000 dollars. And that can work when there are 171,755 cinema screens around the world that generated 40 billion dollars in revenue last year. For the RV we need to expand the distribution channels outside the home if we want to be able to make big budget contents. "
I think that's where the RV Arcade could shine–by offering an experience that is affordable, accessible, in every neighborhood, and more immersive than people could have at home.
In addition, VR arcades need to offer a customer experience that could never be replicated at home. Multiplayer, tournaments, food and drink, game parties and leaderboards are part of that image.
More and more, content creators are building specific experiences for RV arcades.
I have spoken with several independent studies that are realizing that they can make a lot of money by developing content specifically for RV space outside the home.
And while the utilization numbers of the VR headphones continue to fall, the numbers LBVRE (virtual reality based on localization) continue to grow.
Only in the last three months have we seen more than 100 new arcades in Europe and we are tracking more than 3000 companies in the world.
I think the VR Arcade option will continue to be positive for content creators who want a stable revenue in this vacuum period before we reach adoption by massive consumers.
To conclude, although the adoption of the RV in the home has not grown as expected, the RV outside the home is gaining momentum.
And the industry is beginning to realize that the first RV experience for an ever-increasing number of people is going to be in a virtual reality room.
As a result, thousands of virtual reality rooms in small towns and big cities around the world are really the "first lines" in the battle for the adoption of mass consumers.
And while the Dave & Busters and IMAX of the world can get all the press, millions of people around the world are having their first RV experience in their local RV engine room.
My hope is that in the next 12 months, the VR Arcade will start working on some of the problems, see the next level games made for off-home launch, develop loyal customers, get better data to make better decisions and See even more operators that are affected by profitability.
Those who work in the RV Arcade industry are pioneers in a new frontier…. My hope is that we all do everything we can to support each other along the way!
These are some of the key points of a healthy business model of the VR Arcade industry.
1. Most virtual reality rooms are at the point of equilibrium or better, but due to the lack of resources and data from the industry, many of them are still struggling to find the most effective business model.
2. For the next 3 to 5 years, the landscape of life outside the home will be very different, but with the right moves, the VR Arcade could thrive much more than we imagined.
3. To succeed, the VR Arcade must provide a customer experience that could never be replicated at home.
4. Content creators are realizing that they can make a lot of money by developing content specifically for RV space outside the home.
5. Over the next 12 months, millions of people will experience the RV for the first time in an RV room.
* Based on the industry's largest survey to date, nearly two-thirds of RV recreational rooms are at a point of equilibrium or better at the moment.
* Based on a survey of 111 questions, in 2018, of 150 RV arcades along with backend data from 300 locations