- Street: 28 Worthy Lane
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Throughout the previous few years, we have seen a plethora of news articles about the way virtual reality was about to save the classic arcade. The theory goes that the VR gear is too expensive for home users, therefore it creates an opportunity for operators to pony up the big bucks to buy it and make their money back by charging per game to play it.
“While several high-end cans were released last year which can bring virtual-reality adventures to your living space, adoption of this technology remains in its first days for a lot of reasons–it is 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 cans were shipped globally in 2016, according to a quote from market researcher Canalys, but this figure pales in comparison to the prevalence of, say, video game consoles (sales of their top 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. In the meantime, though, a variety of companies are betting that consumers may 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 is tempting to dive into this snare, but in the operator’s standpoint VR is a terrible deal. 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’ll have the ability to get for it down the street.
Another limitation for operators is that while you might be able to supply a room for VR people to wander around in now, as new VR technology is unveiled, we’re likely to see the stage expanded from 100 square feet into the whole world. Instead of viewing just the matches in your headset, you’ll see the true world with sport play overlayed. Since the technology allows more actual world places to be researched, it is going to earn 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 want to pay big buck to play video games, but such as the BETAMAX that came before it, by individuals who wish to watch porn in their homes.
Even if an operator can make just a bit of money for the next few decades, once VR achieves critical mass, it is going to crush whatever revenue flow that operators are dreaming of. Don’t believe me? Just check out what’s happening in China.
A year after 22,000 of these have closed.
This is an incredible failure rate over this short period of time and one that should function as a sharp warning to anyone contemplating investing in the VR games. Maybe Dave and Busters is able to take losses over the games longer than Chinese startup arcades, however I doubt most North American operators are going to fare far better using the tech in their match rooms and will only wind up in debt in the close of the day.
The issue essentially boils down to customers not being prepared to pay a premium for the encounter. Tech In Asia, describes 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 to get a VR experience. One VR arcade owner told iHeima that he saw excited queues when charging US$1.50 for a 30-minute session, but everyone vanished as it rose to US$5. From that sort of revenue it is not possible to pay the lease.”
Even if the match was sold out daily, at $1.50 per half hour they’re just earning $30 per day. With retail rents in North America running $1 — $2 a square foot, there is no way to make the math work, even in the event that you suppose that Americans will pay more to play the matches.
The real world information flowing in from China should serve as a canary in the quarter mines of North America. Operators who spend large amounts of money on elaborate VR setups will soon find their little VR rooms being substituted by the whole world for a stage. Since the installations get cheaper, smaller and more mobile, the digital arcades will seem more costly, bulky and limited. I would like to be proven wrong on this one, but I feel the arcade VR fad is more hype than hope.
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