Throughout the last few years, we’ve seen a plethora of news posts about how virtual reality was going to conserve the timeless arcade. The idea goes that the VR equipment is too expensive for home users, so it creates an chance for operators to pony up the big bucks to purchase it and then make their money back by charging a match to play with it. Much Nolan Bushnell, the inventor of Pong, is attempting to hype the tech as the industry’s savior. In the MIT Technology Review.
“While several high-end cans were released annually which may bring virtual-reality experiences to your living space, adoption of this technology remains in its first days to get a lot of reasons–it’s still bulky, pricey, and there is not all that far to do once you’ve got it on your face. More than two million cans were sent 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 during the 2016 holiday season alone). Consumer virtual reality will likely catch on as costs come down and cans improve. In the meantime, though, a number of companies are betting that consumers could possibly be pleased to cover a much smaller sum to try the tech with their buddies at, say, an arcade, theme park, or even bowling alley”
It’s tempting to fall into this snare, but in the operator’s perspective VR is a terrible deal. Aside from buying a brand new car and driving it a mile, I can not think about a way that you could eliminate money faster between what you pay and what you’ll have the ability to get for it down the road.
Another limitation for operators is that while you may be able to supply a room for VR people to wander around in today, as new VR tech is introduced, we are likely to see the stage expanded from 100 square feet into the entire world. Instead of viewing just the matches from your headset, you’ll realize the true world with sport play overlayed. Kids can go to the park and relive the knights of the round table or parking garages to shoot aliens. Since the tech allows more real world places to be explored, it’s going to make a cramped arcade seem pretty lame in comparison.
VR is already heading for mass market acceptance, however it is demand is not being pushed by players who wish to pay big buck to play with video games, but such as the BETAMAX that came before it, by individuals who want to watch porn in their houses.
Even when an operator can make a bit of money for the upcoming few decades, after VR achieves critical mass, it is going to crush whatever revenue stream that operators’re dreaming of. Do not believe me? Just check out what is happening in China.
A year later 22,000 of these have closed.
That is an incredible failure rate over such a short time period and one that should serve as a sharp warning to anyone contemplating investing in the VR games. Perhaps Dave and Busters can afford to take losses over the games more than Chinese startup arcades, however I doubt that most North American operators will fare far better using the tech in their match rooms and will only end up in debt in the end of the day.
The issue essentially boils down to customers not being willing to pay a premium to the experience. Tech In Asia, clarifies the problem perfectly in their article, on the Chinese VR boom and bust.
“Enterprising shop owners jumped into VR are finding it impossible to charge fees comparable to cinemas or bowling alleys for a VR experience. 1 VR arcade owner told iHeima he saw excited queues when charging US$1.50 for a 30-minute session, but everybody disappeared when it rose to US$5. By that kind of revenue it’s not possible to pay the rent.”
Even if the game was sold out daily, at $1.50 a half hour they are only earning $30 per day. With retail rents in North America running $1 — $2 a square foot, there’s no way to make the math work, even in the event that you assume that Americans will spend more to play with the games.
The actual world data flowing in from China should function as a canary in the quarter mines of North America. Operators who spend large amounts of money on fancy VR setups will soon find their small VR rooms being replaced by the entire world for a stage. As the installations get more expensive, smaller and more portable, the virtual arcades will look more expensive, bulky and restricted. I would like to be proven wrong on this one, but I feel that the arcade VR fad is more hype than hope.