5 Reasons Location Based Entertainment (LBE) Will Drive the VR Industry in 2017

Virtual Reality was everywhere in 2016 garnering space at industry tradeshows and shows dedicated to VR enthusiasts and opportunists.  Promising emerging technologies always thrive at tradeshows early on.  While most of the investments and product announcements have been focused on the consumer, the LBE market has been steadily building momentum. Here are 5 reasons 2017 will be the year of LBE VR.

  1. Lowest Price to Try

The investment for a consumer to own their own in-home VR system ranges from $800 for mobile VR (driven by a high-end phone) to $2000 and higher for an Oculus or Vive setup depending upon the computer.  That does not include the cost of VR games.  In contrast, you can experience VR at an increasing number of venues for $5 to $50 depending upon the experience.  There is a long history of out-of-home entertainment that draws in visitors from near and far to have fun doing something they could not otherwise afford to do in their own home.  We are entering Arcade 2.0.

  1. Custom Experiences Not Available at Home

Theme parks, arcades and family entertainment centers seek differentiation and a competitive advantage through their unique entertainment offerings.  Attractions go well beyond consumer VR as the experience must be compelling enough to draw in customers and robust enough to withstand constant public use.  As was evidenced with the recent Halloween Horror Nights experience, The Repository, VR can be combined with physical environments, special effects like wind and heat, live actors, full sets and intriguing narratives to create one-of-a-kind attractions.

  1. Larger Customer Base

While certainly not every visitor to a theme park or arcade will try VR, an increasing number will.  Theme parks in the US alone attract more than 375 million visitors annually with one in four Americans stating they have visited a theme park in the past year.  Dedicated VR attractions and retrofitted VR rides like roller coasters are springing up like wildfire in parks all over the world.

In contrast, by industry estimates, globally fewer than 2 million combined units were sold of the top 3 major premium VR consumer platforms in 2016 and while millions of mobile VR units have been given away or sold, one time or very occasional use is more common than regular use.  These numbers are well below early forecasts as consumer VR continues to face many obstacles.

  1. Studios Need ROI

Millions of dollars have been invested in developing consumer VR games in the last 18 months, but the ROI (Return on Investment) has not materialized.  Attractively, the same VR assets can be monetized in the LBE market, increasing the ROI and potentially drawing in a completely different market base of those who are interested in and curious about VR, but not willing or able to buy a home system.

  1. Land and Expand

The more strategic participants in the consumer VR ecosystem view LBE as a means to ultimately increase the consumer uptake of VR.  VR has the potential to offer applications well beyond gaming – to become a technology used by the entire household like the PC and Smartphone.  Education, Training, Healthcare, Social and Virtual Travel are among the applications gaining attention.  LBE allows non-gamers to be exposed to VR in a low cost and simple way which is critical because VR has to be experienced to be understood.

While those firmly entrenched in consumer VR gaming investments are feeling the pressure to demonstrate promised success, many are actively expanding their market view to include non-gaming applications and Location Based Entertainment (LBE) as a means to finally push VR past the point of no return.

The Next Big Thing, “Vertical Social Networks”

People naturally group together. It is not just human nature, but the way all nature is designed. We group together around relationships, shared interests, economic drivers, convenience, efficiency, efficacy – and the list goes on and on.

Broad horizontal Social Networks like Facebook and Twitter have leveraged our new found global interconnectivity to make it easy to connect – to group together as friends and family. They are based on either very close personal or business relationships or on some broad common goal or interest – I, too, like very cute cat videos.

The power of Social Networking is still woefully underutilized. It seems like we’ve come a long way and indeed we have, but it is only the beginning, like the first trail for wagon trains across the country compared with the interconnected road system we now take for granted. We are entering the next phase with Vertical Social Networks (VSN) – specialized communities around a shared interest, location, need, event or affiliation. Who would want a VSN and would anyone pay money or make money? Here are a few data points:

You are seeing Vertical Social Networks slowly emerge around common goals like Airbnb around travel and Uber around transportation. These crowd economy companies are pioneers forging new trails. Think of everything you do and imagine the “network” to make it easier. Not just a bulletin board to post to masses and search through to see if your answer is in there somewhere. Not just email lists where you are bombarded with a stream of sometimes wanted sometimes not information. Not just a phone number to call and wait to be given an unsatisfying solution.

Every business, brand or interest can spawn a Vertical Social Network where one could purchase, learn, exchange, sell, recommend and generally engage. Blend crowd economy with social networking, bulletin boards and ecommerce and you get a new generation of interconnected networks.

The truly interesting part of this movement is that a critical mass can be much smaller than 10 or 20 % of the world’s population. 1 million people or even 100k people connected together for the right purpose can be immensely useful and powerful. Vertical Social Networks won’t grow or be created only to get rich from a unicorn IPO, although some certainly will take that path. Thousands will simply serve a purpose, provide value, fill gaps, make life more efficient or convenient, or provide support. These are mom and pop businesses, lifestyle businesses, mid-size markets and everything in between. Technology that has been driven and developed by Social Network giants is enabling a whole new generation of Vertical Social Networks. In our lifetimes, connectedness seems poised to change everything.