Over the last couple of years, we’ve seen a plethora of news posts about the way virtual reality was about to save the classic arcade. The theory goes that the VR equipment is too expensive for home users, so it creates an chance for operators to pony up the big dollars 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 may bring virtual-reality experiences to your living space, adoption of this technology remains in its earliest days for a bunch of reasons–it is still bulky, pricey, and there isn’t all that far to do once you’ve got it on your face. Over two million headsets were sent worldwide in 2016, according to an estimate from market researcher Canalys, but this figure pales compared to the prevalence of, say, video game consoles (sales of their leading one, Sony’s PS4, topped six million during the 2016 holiday season ). Consumer virtual reality will probably catch on as costs come down and cans improve. Meanwhile, however, 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 bowling alley.”It’s tempting to fall into this trap, but in the operator’s perspective VR is a terrible thing. Other than buying a brand-new vehicle and driving it a mile, I can’t think of a way 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 may be able to supply a room for VR people to roam around in today, as new VR tech is introduced, we’re likely to find the point expanded from 100 square feet into the whole world. Rather than viewing just the matches from your headset, you will see 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 take aliens. Since the tech allows more real world places to be explored, it is going to make a cramped arcade seem fairly lame in comparison.VR is already heading for mass market acceptance, however it’s demand is not being pushed by gamers who want to pay big buck to play video games, but such as the BETAMAX that came before it, by individuals who want to watch pornography in their homes.Even when an operator can create just a little bit of money to the next few years, once VR achieves critical mass, then it will crush whatever revenue flow that operators’re dreaming of. Don’t believe me? Just check out what is happening in China.Last year, an eye popping 35,000 virtual reality arcades opened up in China. A year after 22,000 of them have closed.That is an incredible failure rate over such a short time period and one that should function 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, but I doubt most North American operators will fare much better using the technology in their game rooms and will just end up in debt in 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, describes the problem perfectly in their own article, on that the Chinese VR boom and bust. “Enterprising shop owners leaping into VR are finding it impossible to charge fees akin to cinemas or bowling alleys for a VR experience. One VR arcade owner told iHeima that he saw eager queues when charging US$1.50 for a 30-minute session, but everyone vanished when it rose to US$5. From that kind of revenue it is impossible to pay the rent.”Even if the match was sold out daily, at $1.50 per half hour they’re only earning $30 a day. The actual world data streaming in from China must function as a canary in the quarter mines of North America. Operators who spend considerable amounts of money on fancy VR setups will probably find their little VR rooms being substituted by the entire world for a stage. As the installations get cheaper, smaller and more portable, the virtual arcades will look more costly, bulky and limited.
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