Over the last few years, we've seen a plethora of news articles about the way virtual reality was about to conserve the timeless arcade. The idea goes that the VR indoor playground equipment - www.childwelfaresocietykenya.org
- is too expensive for home users, therefore it creates an chance for operators to pony up the big dollars to purchase it and make their money back by charging a match to play it. Much Nolan Bushnell, the inventor of Pong, is attempting to hype the tech since the industry's savior. From the MIT Technology Review
"While several high-end cans were released last year that can bring virtual-reality adventures to your living space, adoption of the technology remains in its earliest days for a lot of reasons--it's still bulky, expensive, and there isn't all that far to do once you've got it on your face. More than two million cans were sent worldwide in 2016, according to a quote from market researcher Canalys, but this figure pales compared to the popularity 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 headsets improve. Meanwhile, however, a number of businesses are betting that consumers may be happy to cover a much smaller sum to try out the tech with their buddies at, say, an arcade, theme park, or even bowling alley."
It's tempting to dive into this snare, but from an operator's perspective VR is a terrible deal. Operators are being asked to pay top dollar for technology that's all but guaranteed to plummet in value over the very short term. Aside from buying a brand-new car and driving it a mile, I can't think about a way you could eliminate money faster between what you pay and what you'll have the ability
to get for it down the street.
Another limit for operators is that while you might be able to supply a space for VR people to roam around in now, as new VR tech is unveiled, we are going to see the point expanded from 100 square feet into the whole world. Instead of viewing just the matches from your headset, you'll see the real 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 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, but it is demand isn't being driven 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 wish to watch porn in their houses.
Even if an operator can make just a little bit of money to the upcoming few years, after VR achieves critical mass, it is going to crush whatever earnings stream that operators're dreaming of. Do not believe me? Just check out what is happening in China.
A year after 22,000 of these have closed.
That is an incredible failure rate over this short period of time and one which should serve as a sharp warning to anyone contemplating investing in the VR games. Maybe Dave and Busters is able to take losses over the matches more than Chinese startup arcades, however I doubt most North American operators will fare much better using the technology in their match rooms and will only end up in debt at the end of the day.
The issue basically boils down to customers not being prepared to pay a premium for the encounter. Tech In Asia, clarifies the problem perfectly in their article, on that the Chinese VR boom and bust.
"Enterprising store owners leaping 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 for a 30-minute session, but everybody disappeared when it climbed to US$5. By that kind of revenue it is impossible to cover the rent."
Even if the game was sold out all day, at $1.50 a half hour they are 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 with the games.
The actual world information streaming in from China must 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 as a stage. Since the setups get more expensive, smaller and more portable, the virtual arcades will look more expensive, bulky and limited.