Throughout the last few years, we have seen an array of news posts 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 make their money back by charging a match 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 experiences to your living space, adoption of the technology is still in its first days for a bunch of reasons--it is still bulky, expensive, and there isn't all that far to do once 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 compared to the prevalence of, say, video game consoles (sales of their top one, Sony's PS4, topped six million during the 2016 holiday season alone). Consumer virtual reality will probably catch on as prices come down and cans improve. Meanwhile, however, a variety of businesses are betting that customers may be happy to cover a much smaller sum to try out the technology with their buddies at, say, an arcade, theme park, or even bowling alley"
It is tempting to dive into this trap, but in the operator's standpoint VR is a terrible deal. Other than buying a brand-new vehicle and driving it a mile, I can't think about a way that you could eliminate money faster between what you pay and what you'll be able to get down the street.
Another limit for operators is that while you might be able to provide a space for VR individuals to wander around in today, as new VR tech is unveiled, we're going to see the stage expanded from 100 square feet to the whole world. Rather than viewing just the matches from your headset, indoor playground equipment you'll realize the true world with game play overlayed. Children can go to the park and relive the knights of the round table or parking garages to take aliens. Since the technology allows more real world places to be researched, it is going to earn a cramped arcade look fairly feeble in comparison.
VR is already heading for mass market acceptance, but it is demand is not being pushed by gamers who want to pay big buck to play with video games, but such as the BETAMAX that came before it, by people who wish to watch porn in their homes.
Even when an operator can make a little bit of money for the upcoming few decades, after VR achieves critical mass, it will crush whatever earnings flow that operators're dreaming of. Don't believe me? Just check out what's going on in China.
This past year, an eye popping 35,000 virtual reality arcades opened in China. A year later 22,000 of these have closed.
This is an unbelievable failure rate over this short time period and one which should function as a sharp warning to anyone considering investing in the VR games. Maybe Dave and Busters can afford to take losses on the matches longer than Chinese startup arcades, however I doubt that most North American operators will fare far better using the tech in their game rooms and will only end up in debt in the end 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 article, on that 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. 1 VR arcade owner told iHeima that he saw excited queues when charging US$1.50 to get a 30-minute session, but everybody vanished when it climbed to US$5. By that kind of revenue it's not possible to pay the lease."
Even if the match was sold out all day, at $1.50 a half hour they are just earning $30 a day.
The actual world data flowing in from China must function as a canary in the quarter plantations of North America. Operators who spend considerable amounts of money on fancy VR setups will soon find their little VR rooms being replaced by the whole world for a stage. As the installations get more expensive, smaller and more portable, the digital arcades will look more costly, bulky and restricted. I would like to be proven wrong on this one, but I feel the arcade VR fad is more hype than hope.