Want A Thriving Business? Avoid VR Games!
"While several high-end headsets were released annually that may bring virtual-reality experiences to your living space, adoption of the technology remains in its first days for a lot of reasons--it's still bulky, pricey, and there is not all that much to do as soon as you've got it on your face. More than two million headsets were shipped globally in 2016, according to an estimate from market researcher Canalys, but this figure pales compared to the prevalence of, say, video game consoles (earnings of the leading one, Sony's PS4, topped six million throughout the 2016 holiday season ). Consumer virtual reality will probably catch on as costs come down and cans improve. Meanwhile, however, a variety of businesses are betting that consumers could possibly be pleased to pay a much smaller sum to try the technology with their friends at, say, an arcade, theme park, or even bowling alley"
It is tempting to fall into this trap, but in the operator's standpoint VR is a terrible deal. Operators are being asked to pay top dollar for tech that's all but guaranteed to plummet in value within the very short term. Aside from buying a brand new vehicle and driving it a mile, I can't think of a way that you could eliminate money quicker between what you pay and what you will have the ability to get down the road.
Another limitation for kids indoor playground operators is that while you may have the ability to provide a room for VR individuals to roam around in now, as fresh VR tech is introduced, we're going to see the stage expanded from 100 square feet into the entire world. Instead of viewing just the games from your headset, you will see the real world with game play overlayed. As the tech allows more real world places to be explored, it is going to earn a cramped arcade seem pretty lame in comparison.
VR is heading for mass market acceptance, however it is demand is not being pushed by players who wish to pay big buck to play video games, but like the BETAMAX that came before it, by individuals who wish to watch porn in their houses.
Even if an operator can create just a little bit of money for the upcoming few decades, after VR achieves critical mass, it will crush whatever earnings stream that operators are dreaming of. Don't believe me? Just check out what is going on in China.
A year after 22,000 of these have closed.
This is an incredible failure rate over this short time period and one that should serve as a sharp warning to anyone considering investing in the VR games. Maybe Dave and Busters is able to take losses on the matches longer than Chinese startup arcades, however I doubt that most North American operators will fare far better using the tech in their game rooms and will only end up in debt at the end of the day.
The problem essentially boils down to consumers not being willing to pay a premium for the encounter. Tech In Asia, clarifies the issue perfectly in their article, on the Chinese VR boom and bust.
"Enterprising shop owners jumped into VR are finding it impossible to bill fees comparable to cinemas or bowling alleys to get a VR experience. 1 VR arcade owner told iHeima he saw excited queues when charging US$1.50 to get a 30-minute session, but everybody disappeared when it climbed to US$5. From that sort of revenue it is not possible to cover the rent."
Even if the game was sold out all day, at $1.50 a half hour they're just earning $30 a day. With retail rents in North America running $1 -- $2 a square foot, there's no way to make the math work, even if you assume that Americans will spend more to play the matches.
The actual world information streaming in from China should serve as a canary in the quarter mines of North America. Operators who spend considerable amounts of money on elaborate VR setups will soon find their little VR rooms being replaced by the whole world for a stage. As the installations get cheaper, smaller and more mobile, the virtual arcades will seem more expensive, bulky and restricted.
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