Over the previous few years, we've 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, 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 game to play with it. Much Nolan Bushnell, the inventor of Pong, is attempting to hype the technology since the industry's savior. In the MIT Technology Review.
"While several high-end cans were released last year that may bring virtual-reality adventures to your living space, adoption of this technology is still in its first days to get a lot of reasons--it's still bulky, pricey, and there isn't all that much to do as soon as you've got it on your face. Over two million cans were sent worldwide in 2016, according to an estimate from market researcher Canalys, yet this figure pales in comparison to the prevalence of, say, video game consoles (earnings of the leading one, Sony's PS4, topped six million throughout the 2016 holiday season alone). Consumer virtual reality will likely catch on as costs come down and headsets improve. In the meantime, though, a number of businesses are betting that consumers may be happy to pay 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 fall into this snare, but from an 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 over the very short term. Other than buying a brand new vehicle and driving it a time, I can not think about a way that you could lose money quicker between what you pay and what you'll have the ability to get down the road.
Another limitation for operators is that while you may have the ability to supply a room for VR people
to wander around in now, as fresh VR tech is introduced, we are going to find the stage expanded from 100 square feet into the entire world. Rather than viewing just the matches in your headset, you will realize the real world with game play overlayed. Children can visit the park and relive the knights of the round table or parking garages to shoot aliens. As the tech allows more actual world places to be researched, it's going to make a cramped arcade seem fairly lame in comparison.
VR is already heading for mass market
acceptance, but it is demand isn't being pushed by players who want to pay big buck to play with video games, but like the BETAMAX that came before it, by individuals who wish to watch pornography in their homes.
Even when an operator can create just a bit of money to the next few years, once VR achieves critical mass, then it will crush whatever revenue stream that operators are dreaming of. Do not believe me? Just check out what is happening in China.
A year after 22,000 of these have closed.
This is an unbelievable failure rate over this brief time period and one which should function as a sharp warning to anyone considering investing in the VR games. Perhaps Dave and Busters can afford to take losses on the matches longer than Chinese startup arcades, however I doubt that most North American operators are going to fare far better using the technology in their match rooms and will only wind up in debt at the close of the day.
The problem essentially boils down to consumers not being willing to pay a premium for the encounter. Tech In Asia, describes the problem perfectly in their own article, on that the Chinese VR boom and bust.
"Enterprising shop owners jumped into VR are finding it impossible to charge fees akin to cinemas or bowling alleys for a VR experience. 1 VR arcade proprietor told iHeima that he saw excited queues when charging US$1.50 for a 30-minute session, but everyone disappeared as it rose to US$5. From that kind of revenue it is impossible to pay the lease."
Even if the match was sold out all day, at $1.50 per half hour they are only 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 assume that Americans will spend more to play with the matches.
The real world information flowing in from China must serve as a canary in the quarter mines of North America. Operators who invest considerable amounts of money on fancy VR setups will probably find their small VR rooms being substituted by the whole world for a stage. As the setups get more expensive, smaller and indoor playground equipment
more portable, the digital arcades will look more costly, bulky and restricted.