Are VR group activities the ultimate way to spend time with family and friends?
Hello friends, how are you doing? This past week a lot of discussion, especially in my Italian-tech bubble was about the decision of the Italian privacy authority to ban ChatGPT. I forced myself NOT TO write anything about it, I have very strong opinions but everything has already been said. And at the end of the day this might be the true reason why it was banned:
Talking about ChatGPT I actually did 2 new things for this post. Let me start from the beginning: the past weekend I did a fun family activity with my wife and kids (baloon museum) and as part of the exhibition there was a VR-experience, that we all enjoyed a lot. When removing the headset I told my wife “I understand why people are investing so much money into VR. When done right the experience is incredible”. On top of that I noticed how crowded this “experience art” show was, and I made a considerations I have often made: people are desperate for family activities, there’s so much demand and so little supply.
I admit that I often still have that natural tendency to mentally “transform” these considerations into “business ideas”. I used to have a folder in my laptop with all the business ideas I have thought about, and when I was younger (with more time and less cynism to kill nascent ideas) I actually worked on several: an art-based social network at the beginning of the Web2.0 moment (MyFreeArt), an ecommerce focused on italian gourmet food for expat communities in the early 2010s, an avocado-focused dark kitchen in 2016 or an ecommerce for design-replica sofas… I have had a lot of bad ideas, and tried a lot of things…with very little success but honestly a lot of fun and learnings!
Merging these two traits (having weird reflections and tending to understand whether they could be a business idea) with something I had heard in the past I thought “I wonder how VR- based family-focused experiences are doing, and if this could still be a good business?”. I will explain better my thoughts below, but when thinking about this I did two things I had never done:
I said “I should write a post about this”, as writing is indeed the best way to ferment a research on a topic and
I should use ChatGPT to do the research.
We will see how the first part comes out (is this interesting?) but the second part was really once again mind blowing. For this type of things ChatGPT is incredible. I spent 30’ searching on google on VR experiences, and honestly I got almost nowhere. Got a lot of sponsored links and I got lost navigating around. Then I typed this prompt into ChatGPT “I am thinking to write a business blog post about live experiences using VR headsets for groups. What are the best companies doing this?” and after 5 minutes conversing with the AI I had a draft of the key bullets of a blog post about this topic. Totally mind-blowing.
FAMILY ACTIVITIES
I often think about this, and I acknowledge it is because it’s in my bubble (urban family with young children), but I feel like a lot of people around me are desperately looking at fun activities to do outside of home with the whole family. And by family I do not only mean “keep the kids busy” but really activities that are fun for kids and adults, that allow people to spend something together, build some memories and enjoy time outside of home. ChatGPT talking: “There are several reasons why family activities are in high demand. One of the primary reasons is that families are seeking ways to spend quality time together and create lasting memories. In today's fast-paced and technology-driven world, many families are looking for ways to disconnect from screens and engage in activities that promote togetherness and connection.”
My wife is quite a pro at finding cool stuff to do in all the cities we’ve lived in, and we often plan long ahead because most of the coolest experiences go sold out very quickly. We therefore often have discussions about buying tickets for the Disney on ice show that is 12 months+ later! And while I think that family experiences are in high demand, in general outdoor experiences are very popular. This is very evident if you try to book a ticket for a football stadium for a normal game, or for any sporting event. Thinking about the reasons behind the popularity of this type of events I believe that obviously an important factor is the post-covid “hang-over”: after being locked in our houses for a long time we all crave outside group experiences.
I am also convinced that the rise of this type of activities is linked to the increased portion of our lives we live digitally, with a lot of people spending a huge amount of time in front of a computer and their phone screens. This is surely something that also Airbnb’s experiences trend confirms, as I wrote in this post a few weeks ago experiences represent more and more a strategic focus for the company although still being only 10%ish of total revenue.
One final “sociology” point I think has a role in this trend is also that families are nowadays smaller than the past. Potentially the role of spending time with families, playing with siblings and cousins is more and more covered by social activities. In the EU 34% of the families have 1 kid, and the average household size in 2020 was 2.3 persons, down from 2.6 persons in 1990 and 2.9 in 1970. I believe that with smaller family sizes today, parents may feel a greater responsibility to provide more individualised attention and quality time to their children. This also could have some economical drivers: modern families today may have more disposable income to spend on activities and experiences, with fewer children to support, parents may have more resources available to invest in activities that promote togetherness and create lasting memories.
VIRTUAL REALITY EXPERIENCES TREND
Now back to where I wanted to start: does VR have a role in large experiences and could it be possible that actually the metaverse will connect us more as humans? I have never owned a VR set but as many people I have played a lot with it, and while the initial experience is incredible I have always found myself to limit the time spent playing or watching videos because of a sense of motion sickness. I heard this is a classical newbie effect, and that sticking to it this limit progressively fades… and that newer models provide a much better experience. However numbers seem to prove that the consumer adoption of VR sets, at least in the current form, has not boomed as people hoped. There are currently less than 50 million sets worldwide (for comparison in the last 10 years there were over 400MM gaming consoles sold), and while a lot of companies are investing heavily in improving the hardware and the UX, it is still not clear what is the “iPhone moment” for VR.
However, when thinking whether VR sets are destined to the same fate as 3d TVs (with which they share the awkwardness of being on the sofa with other people wearing something to watch content) or drones (which were going to change the word, and eventually became a party trick) or action cameras I stumbled on a podcast a couple of years ago that sounded very interesting to me. I can’t find the podcast but the interview was to the founder of a company called Sandbox, a company founded in 2016 by Steve Zhao. Prior to starting Sandbox VR, Zhao worked in finance and technology, and was an early investor in companies such as Airbnb and Dropbox. Sandbox was in the first wave of the VR companies, and at a very early stage raised over $80MM from top Silicon Valley investors.
One of the things that made me think they had a reasonable business model was that instead of focusing on the consumer VR space, developing hardware or apps/games, they focused their strategy on these “VR experiences”. The company basically leased some very large warehouses in suburban parts of big cities and created these “VR rooms”, basically an empty room where you would join with some friends and get all the equipment and play games together for 20/30 minutes batches. I admit that when listening to him the proposition sounded very interesting: as a customer this takes away all the pain of buying very expensive hardware, having to install software etc.. but more importantly allowed people to experience fun games with friends. It’s like going to the movies, but for a short time and playing a videogame in group. It sounded to me like the killer app for the TikTok/Playstation generation… It is basically an enhanced escape room or to some extent a “gentler” paintball… I could see myself doing it with different crowds (family, friends, colleagues, etc).
I honestly did not pay a lot of attention to this space for the past years, but I did a little bit of research with the help of ChatGPT and one of the key insights I gathered is that the industry, while expanding, is slowly emerging from a big winter due to the pandemic. Like many other physical experiences also VR had a big set back during Covid as a lot of locations were forced to close and had a lot of limitation.
TOP VR EXPERIENCES COMPANIES
When investigating about the space I also found out that, notwithstanding the last years of crisis there are actually a lot of companies engaged in this type of experience both in the US and EU.
The VOID: The VOID is a company that specializes in creating fully immersive VR experiences for groups. Their experiences combine VR headsets with other sensory elements like haptic feedback and wind machines to create a truly immersive experience. The VOID had locations in several cities around the world and has partnered with major franchises like Star Wars, Ghostbusters, and Wreck-It Ralph. The company was the pioneer in the space but it has since closed all the locations and the assets were purchased by one of the key shareholders with the promise to open back at some point in the future.
Dreamscape Immersive: Dreamscape Immersive is another company that provides group VR experiences. Their experiences are designed to be more like a movie or video game than a traditional VR experience, with multiple people participating in a shared virtual environment. Dreamscape has partnerships with major media companies like Warner Bros. and AMC Entertainment. The website seems to point more toward less-heavy-gamers public, with some key adventures like Man In Black or a mission to swim deep in the ocean to rescue a family of whales.
Zero Latency: Zero Latency provides large-scale, multiplayer VR experiences. Their experiences are designed to be played by groups of up to eight people at a time, and they feature free-roaming VR environments with haptic feedback and other sensory elements. The company was founded in 2015 in Australia, and based on my limited research it is one of the most successful in the market with 67 locations in 25 countries.
Hologate: Hologate provides VR experiences for groups that are designed to be easy to set up and operate. Their experiences are designed to be played by up to four people at a time, and they feature a variety of different games and environments to choose from. Hologate has partnerships with major entertainment companies like Universal Studios and Disney. The company is setup as a franchise and they claim to have over 400 systems installed worldwide.
IS THIS A GOOD BUSINESS?
I have not made a conclusive opinion on whether this business is going to grow materially in the future or if these types of experiences are a quick fade like many other trends. Based on my very preliminary research I see at least 2 key obstacles to mass adoption:
Capital - setting up these facilities could be very expensive in cost of capital, either for the central company to pay for the physical expansion or for the local franchisee to buy the equipment.
Content - the key driver of this type of experiences is how good the game/content is and how many variations there are. While I am really intrigued by trying this type of experiences, I appreciate that after you’ve done the game once you want to try something new. And as VR development is still very expensive (this is also one of the key reasons why Oculus is not growing as fast as other platforms) there’s still relatively low scale in terms of content variation.
Additionally this is one of those business models that rely massively on occupancy rate, the real way to crack this from a business stand point is ensure the highest velocity of turn of the equipment (i.e. have the sets being used by as many people as possible every week). However I suspect that this type of activities have a super strong seasonality: a lot of people would want to play on weekends afternoons, but then for the rest of the week it would be really hard to find demand especially during working hours. This is somewhat similar to a hotel on the skiing slopes, during the peak weeks of snow in February you have a lot more demand than rooms, but then there are 11 more months… is the demand you get in the peak weeks enough to generate a profit on a yearly basis?
I have not formed an opinion about it but researching was fun, and it totally pushed me to look for some experiences to do (apparently The Void has locations in Madrid, I am booking one!). I also had fun using ChatGPT to do this research, although the clear shortcoming of it not being linked to internet and thus being “stuck” at Sep21 showed all the limitations in this research: it was completely unaware of the latest development and it gave me companies that are out of business for several months.
What’s your opinion on VR experiences? Would you want to try one? And do you also see this trend for family experiences or am I blind my my consumption pattern?
Ciao!
P.s. talking about trends, remember Clubhouse (aka “the future of media”)??
writing time 30’ - reading time 12’