How You Can Set Up Your Own VR Entertainment Center from Scratch
It wasn’t long ago that we were first introduced to the world of virtual reality with its quality, multidimensional pictures that almost seem real. This new world came as quite a surprise. While some still think it’s a sci-fi concept that will never become reality, the reality is, it already has.
This new technology has quickly come a long way and has stolen the hearts of many, from movie lovers to game enthusiasts. Some business-minded fans of the technology were quick to see the potential, coming up with VR arcades of their own, and already we see thousands of them globally. While some of these VR arcades are successful, most are not. But, the good news is that the VR industry is just beginning its long journey where many can find the way to success.
Starting a VR Business in the Entertainment Industry
For those who’ve thought of starting a VR business, there are some basic tips that you might want to consider before going ahead with your plan. You certainly want to avoid investing in and setting up a VR arcade that won’t bring you the current and long-term profits just because you didn’t do something right.
First, you need to decide what type of VR business you want to build. Is it for gaming or watching movies? With the answer you’ll be able to know what design you want, the setup and the equipment needed.
For example, 360 VR video is considered to be a virtual reality movie and is not (in my opinion) a viable entertainment industry business by itself. A better approach with this technology would be to start with a game arcade and then add some 360 VR videos as supplemental content. A lot of famous YouTubers have tried 360 VR video, but the results were not as popular as originally hoped.
Also, VR escape or quest rooms have not sustained their original popularity. But, you can add some VR quests like the game Keep Talking and Nobody Explodes in your game menu as supplemented content.
How Much Capital is Required?
After determining what approach you want to take, you will need capital for the setup. For a 3,000-square- foot VR arcade with eight HTC Vive headset stations, you will need approximately $100,000.
I recommend that you don’t go with less than four player stations and not more than eight. Be aware that one visitor will, on average, be accompanied by one other person. Make sure you have enough space for friends and family members to be comfortable during their visit as spectators and/or VR players.
If the cost of outfitting a larger space with additional VR stations is prohibitive at the start, you can add one or more stations later on. This is actually helpful because once you’ve been in operation for a while, you’ll have a better understanding of what VR content your visitors prefer.
What Are the Equipment Choices?
When it comes to headsets, I recommend you start with HTC Vive, rather than HTC Vive Pro. (By the way, the Vive is approximately half the cost of the Pro.) All VR games are adjusted to the quality of HTC Vive.
As for computers, an Intel Core I7 with GeForce GTX 1070 is enough. The price should be around $1,300 for each computer per station.
I also suggest you consider using the Vive Wireless Adapter. You can save $40 monthly with this HTC Vive three-in-one cable. You should also subscribe to news reports from Windows Mixed Reality and Oculus.
You can really benefit from learning about new products and innovations. There are important changes going on all the time.
Who’s Your Customer?
That’s a tricky question.
Of course, it depends on location, but in general, it’s a 5- to 12-year-old boy with a parent (generally Mom) or a 20- to 30-year-old male hanging out with his friends.
Don’t get mad at me, but at first, don’t go out of your way to specifically attract women. Demographically, they are less likely to play (some would say they generally don’t like VR).
Suggestions are as simple as donning a headset messes up a player’s hair and that women are more likely to have concerns over the sanitary conditions of the headset. The truth is that even though their numbers are much lower than men, women who do like VR will play regardless of whether or not you specifically market to them.
Be keen to who’s coming in and out of your VR game room to keep updated on who your players are and make adjustments. For sure you need to figure out who your players are within a couple of months after starting your VR arcade.
Everybody knows that a successful business concept needs to be designed to easily attract customers. The design of the VR arcade needs to be from above average to top notch, depending on how much money you are willing to invest in the location space.
I recommend a conservative approach, not investing a great deal in the design. In most cases, you won’t see a large return on investment in this category. Start with neon and white walls, and turn the lights down. Have enough comfortable seating capacity and add a small bar and snacks to keep people there longer.
Consider having one staff member to four VR stations. This is important: Hire people who actually like to play VR! It’s quite difficult for non-gamers to explore VR game mechanics. Be sure that your game operator(s) know everything about the equipment and software you have chosen.
Most systems are unstable and glitches will occur quite frequently.
Each of your team members must know how to reboot the system and easily diagnose common problems. Having replacement parts is also highly recommended.
Also, make sure the staff members know how to play each of the games available from the menu. Your customers will have questions from which are the best games to how-to tips during play. Your employees need to know.
You can reduce your costs by using a VR management system such as SpringboardVR or SynthesisVR.
What About Content?
I suggest you begin by offering 10-15 VR games as well as a few VR videos.
Add new games when you’ve gotten to know your customers better and allow time for your staff to train and explore each game’s mechanics.
Here are my Top 10 VR game picks for arcades:
- Arizona Sunshine
- Space Pirate Trainer
- Skyfront VR
- Ready Player One
- Beat Saber
- Waltz of the Wizard
- The Lab
- Rec Room
- Richie’s Plank Experience
- Job Simulator
My Top 5 VR videos:
- Senzo Peso
- The Blu
- Manifest 99
Note: Multiplayer games are best since regular visitors prefer those.
I have found that the monthly average revenue per VR player station varies from $1,000 to $2,000.
Revenue depends on a number of factors, but the main one is where the VR arcade is located: Is it a standalone facility or an attraction within a family entertainment center? Search for the proper customer flow and capture it.
I don’t think it’s wise to spend money on marketing at the very beginning. Without attendance statistics, you won’t be able to clearly understand the efficiency of your marketing efforts.
Adding additional time or bonus games helps promote more revenues in the early days and months. Later, you can add more marketing practices. Be creative and persistent. Try different experiments and evaluate their success or failure.
How much should you charge per play? A fair price is between $0.70 to $1 per minute dependent upon the session length (the average session is 7 to 15 minutes). Don’t implement high discounts –– the players will only play so many minutes per visit and you don’t want to undercut your profits.
If you want a profitable business, track your basic expenditures. They should not exceed the industry average percentage of gross revenue:
- Rent + common area maintenance: 15 to 20 percent
- Staff: 25 to 30 percent
- Games license fees: 12 percent
Of course, you will have other operating expenses, but the three listed above are the bigger ones. Keep them within the given ranges.
So, is the virtual reality arcade business worth it?
Yes! I believe the VR arcade business can be very profitable and hasn’t yet reached its peak. Despite its popularity, VR is still being thought of as a sci-fi concept, but it’s a very promising concept. Analysts predict that the out-of-home VR market is poised to not only broaden but to boom.
Yaroslav Sobko is an entrepreneur, marketer, blogger, and amusement business specialist with a masters degree in Computer Science and the special degree in banking, corporate and finance from the National Technical University of Ukraine.
In 2005, he founded Planet of Attractions Ltd., which later became the basis for the Gametrade Group. This group has been participating in the creation, development, and promotion of hundreds of amusement centers in Russia, Ukraine, Poland, Kazakhstan, Belarus and Moldova for the past 13 years. His company owns several FECs, working since 2010 under the trademark Sureprize.
Over the past couple of years, Yaroslav began working with Frank Seninsky, assisting in expanding The Redemption & FEC Report, Frank’s blog, and a YouTube channel with over 400 videos from industry trade shows and educational events.
He also hosts business management workshops and other training sessions. His articles and posts have been published in industry magazines and on his blog at Sobko.info with a readership of 75,553. Yaroslav is currently on AMOA’s Board of Directors. To email him, it’s [email protected].