VR and Your Location – What Makes Sense?

Last week I wrote about how your capabilities as an operator are critical to selecting the best VR attraction for your business. (The email had formatting issues, so if you had trouble reading it, I have fixed it, and you can read it here.). From marketing to staffing, to technical prowess, your proficiency in these and other skillsets will play an increasingly critical role in your success as you move from arcade systems to free roam or even multisensory attractions.

Now let’s turn the lens towards the different locations and unpack how your existing physical business and product mix matches with the various concepts available today. There are so many location-based entertainment venues adding virtual reality these days it will be hard for me to cover them all in tremendous detail. If I’ve left your location type out of this list and want some guidance, or you want to go deeper into the requirements of your particular location, click this link and drop me a message.

VR Arcades started this third wave of virtual reality around the launch of the HTC Vive. VR enthusiasts rushed to build retail arcades with anywhere from 3 to 20 or more room-scale VR “booths,” renting them by the half hour. These locations attract those who are curious or dedicated to VR gaming. At some point, if VR becomes a product of widespread consumer adoption, these locations will need to pivot their product offerings to something that consumers cannot experience at home, or they will go the way of the mall arcades of the 1980s, the dinosaurs, and the character-driven drama in the movie theater.  Most VR arcades are limited in space, so need to focus on capacity and revenue per square foot.  They need compact attractions with high utilization rates, which is why most offer a full selection of games in a single booth. No matter what time of day, the consumer can play anything they want in whatever station is available at the time.

Because of this space limitation, arcade owners often ignore single concept games and attractions, thinking that more variety will lead to a bigger audience. This is a typical fallacy in marketing and is disproven all the time. Many restaurants offer one thing on the menu and routinely have lines around the block. In Perth, Australia, I recently visited Toastface Grillah, a sandwich shop that only sells one thing, grilled cheese sandwiches.

In Melbourne, there’s a place called Very Good Falafel. Can you guess what they sell? There’s ALWAYS a line around the block. Have you ever been to Ess-A-Bagel in NYC? Please grab a cup of coffee before you get there so you can enjoy it while you wait a half hour for a takeout bagel and smear.

There are a few arcades out there that only offer one great game: Tower Tag, and they do very well. Virtual Room in Los Angeles has ten stations and provides a single time-travel game. They are packed all the time and are expanding.

One reason single game arcades work is it’s easy to communicate to the market what you do. “Tower Tag – It’s like laser tag but in a space-aged stadium,” that’s a clear value proposition.

“Travel through time, from the age of the dinosaurs to ancient Egypt, to the moon landing in the 1960s, uncovering mysteries and unlocking puzzles with your friends.” People get that; it’s evocative. You can more easily sell the experience when you know what it is. If you’re offering 100 games, it’s hard not to fall back to selling “VR” which is much harder to do.

Many arcades have tried to offer driving simulators due to their compact nature, but none are well-executed, so they lead to motion sickness. Without a well-synchronized motion base, the constant acceleration and deceleration is a recipe for nausea. Most racing games available for a commercial license are high-end simulators, not arcade games, and come with steep learning curves. Players crash more frequently, adding to the discomfort factor.

Some bigger arcades are offering dedicated group experiences on a limited time basis, rotating new attractions every couple of months. VR World in NYC recently hosted Ayahuasca: Kosmik Journey, a curated social experience where guests joined a shaman in a virtual hallucinogenic experience.  It ran for two months in a room themed like a native hut in the Amazon jungle.

Family entertainment centers (FECs) are rushing to add VR attractions to differentiate from their competition, stay relevant in a time of massive demographic shifts and limitless in-home entertainment options, or offer their customers the latest and greatest entertainment experience. FEC’s have anchor attractions like bowling, skating, go-karting, laser tag, ropes courses, and increasingly high-quality food and beverage. They have built-in traffic from reputation, marketing, group and birthday party sales, and a critical mass of activities.

Since FEC’s already have anchor attractions and range in size from 20K – 100K square feet (2K-10K meters) they can consider almost the entire range of attractions. However, most FEC operators are looking at VR as something to check off on their equipment list. (I wrote more about this for Replay Magazine here.“) I need a VR, what should I buy” is the most frequent question I get.  The one I long to hear is, “I want to offer my customers the most amazing experiences. How can VR help me do that?”

Too often, FEC’s are just buying what they see everyone else buy, which today is Hologate. As former clients, I could not be happier for Leif, Armando, and the teams at Hologate and Creative Works for their success. However, buying something because that’s what everyone is doing is uninformed. There are dozens of great VR products on the market today, and more coming every quarter. One advantage of this VR wave is there’s an almost unlimited opportunity to differentiate from your competition. Buying the same thing as everyone else throws that out the window. I realize this is because operators don’t have an evaluation framework, which is why I am writing this blog series.

With their large birthday party and group business, FEC’s should be looking at a range of VR attractions offered at different price points. Two to four single-player VR arcade games can give customers a taste of what VR offers at a low price point. Multiplayer arcade systems demonstrate the fun of social immersion where they play with their friends and family at a mid-price point. Once customers get a taste of VR, they will be easier to graduate into the higher priced and mind-blowing arena-based systems. These larger systems also offer the ability to have parties and groups play together, with some of the higher capacity systems using new hybrid tracking technology allowing a higher density of players per square foot for increased throughput during the critical peak operating hours.

FEC’s need to build VR arcades within their facilities if they want to stay relevant. Those that move first will enjoy a competitive advantage and a brand lift. Creating a VR arcade inside an FEC also solves one of the most significant issues of VR – labor cost.  Most attractions require an attendant, which during off-peak times can inflate your labor costs. Many operators foolishly decide not to staff the attraction when they aren’t busy, missing the opportunity to convert their customers to players. Staffing is critical to your success (I wrote about this last week here). Having multiple attractions means you can staff them with one or two employees during slow times, run a more cost-effective labor rate, but still offer the service and conversion you need to succeed.

Trampoline Parks are also jumping in (sorry, can’t resist a pun) to the VR wave. Most position themselves as a place for active, healthy entertainment, and parents embrace them to get their kids away from their addiction to electronic media. Adding VR to a trampoline park business without undermining your brand positioning is challenging. Many operators, however, are struggling to maintain revenue growth and profitability due to the high level of competition. They are adding arcade games and getting away from their core value proposition, which will only further erode their positioning.

For trampoline parks, find VR attractions that encourage kids to move and be active. New tracking tech with lighter headsets will enable people to run in VR soon. HolodeckVR has a system designed for kids that 20 or more can play in a 2000 square foot space or less with no backpacks or cords.  Treadmill systems get players heart rates up, with the recently launched OmniArena from Virtuix offering a best-of-breed turnkey attraction for this market.

Even great games in the single player arcade catalogs are proven to burn calories. Check out the VR Health Institute website to see how VR games compare to exercise regimens like ellipticals, running and tennis to determine which games to offer that leaves parents feeling good about bringing their kids to your location.

Next week I will cover how VR attractions fit into theme parks, shopping centers, and casinos, and in the following posts will go into Zoos and Aquariums, Children’s Entertainment Centers, Science Centers, Museums, and Escape Rooms. If there are other types of locations, you want me to write about just reply to this email.

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