Latest VR business models come from the 19th century
In 1890, if you wanted to listen to recorded music you went to a coin operated music arcade. For example, storefront locations in Cleveland and Cincinnati featuring a dozen phonographs grouped together, allowed an attendant to monitor and maintain the machines and give patrons a clean environment in which they could listen to a series of melodies in rapid succession.
In 2017, the same business model is succeeding in the forever-seeking-a-business-model world of VR.
This model is sorely needed. In the last 5 years, VR has emerged from one of the longest hype curves to slowly slip into the Trough of Disillusionment. At the 2017 Mobile World Congress in Barcelona, the number of virtual reality units on the stands fell substantially compared to the previous congress. 2016 saw virtual reality as a novelty that everyone wanted to try, but interest has waned as very little has changed in 12 months.
To put some numbers to that, around 800,000 PlayStation virtual reality units were sold in 2016, according to research firm Canalys and MIT’s Technology Review, along with 400,000 Oculus Rift sets. Decent numbers, but nowhere near the volumes being sold for smartphones, even when they first came out. When Apple first debuted the iPhone in 2007, for instance, the model sold nearly seven million units in its first five quarters.
VR is facing two problems: not enough people are buying the necessary headsets, and the technology itself isn’t developing quickly enough. Virtual reality tech still faces limitations including a high price tag, clunky units that are uncomfortable to wear and in many cases the awkward attachment of an HDMI cable.
Follow the story
We are constantly reminded how important storytelling is in the development of content and in this case storytelling will be key to the success of VR… as it has been in almost all 20th century content distribution technologies. Stories are powerful forms of communication, and that combined with a new immersive content technology will be a paradigm shift in making the VR experience commonplace.
Unlike gaming, when it comes to movies, people aren’t active participants, nor do they want to be. I just want to eat my popcorn and not interfere with the story. So as an observer of the story in VR, you are more like a ghost in the environment, a passive participant of sorts, following the story, not making it.
Additionally, stories are the most profound way for people to understand new perspectives on life, so it’s not just about entertainment. Check out Chris Milk’s Ted talk on how he is creating VR storytelling today, and you can see some examples at With.in. As always, VR or not, the content has to hit home in order to succeed.
The return of the Arcade
Cinema VR is just a term to describe watching movies in Virtual Reality, differentiated from Gaming VR (mixed reality), Educational VR, or Geo exploration. Also known as location-based VR, Cinema VR is a growing slice of the VR revenue pie. It is a 21st century arcade; you go to a place, pay for an entrance, sit in a chair and experience VR. Greenlight Insights forecast that location-based virtual reality in malls and movie theaters will bring in $222 million worldwide in 2017; by 2021, that amount will have grown to almost $1.2 billion.
One case study in Cinema VR is Samhoud Media which in 2015 experimented using pop-up theaters around Europe. It was a hit and earlier this year the company announced it’s going all in with VR movie theaters with the opening of its first permanent VR Cinema theater in Amsterdam.
In this same vein the the US, VR World NYC offers a similar setup: a guided experience in VR using short movies while sitting in a rotating chair.
And the goliath of big cinema, IMAX, recently launched a VR center in New York City. IMAX believes that VR will be a potential driver of future growth. The company previously announced an agreement with Time Warner Inc.’s Warner Bros. Home Entertainment to produce original interactive VR content for Aquaman and Justice League. This follows a partnership with Alphabet’s Google to develop a cutting-edge VR camera, which are uniquely suited to address challenges posed by VR. With all these Hollywood types in the game, plenty of high quality productions are sure to follow.
Arcades introduce the use of new content technologies.
The Cinema VR popup model has been present in almost every introduction of new media and it functions as a test bed for the technology as well as the content.
Remember our phonograph arcades? By 1893, there were over 100 phonograph parlors located in big cities around the United States, and Thomas Edison had hit on another new idea, a device that could display moving pictures. At the time, stereo scope viewers, in which a person examined a picture through a special eyepiece that made it appear three dimensional, had been popular for some time, and had also incorporated a coin slot . And, a German named C. Bach introduced a viewer called the Kalloscope that proved one of the most popular coin machines of the late nineteenth century. In this device, a series of pictures were placed on a chain inside a wooden box, and the user could rotate through the series by turning a knob.
We know where this introduction of all these content technologies ended up: as a flat-screen TV in your home showing you stories about elves, wizards, knights and chemists. With Cinema VR, users have the opportunity to experience a new content format in a social setting, at an accessible price, just like they did 125 years ago. This arcade business model, although not as sexy as having a Oculus Rift in your home, is the model which will be the training camp for quality VR content.
As for brands planning to delve into the VR branded content arena, they may want to consider and popup arcade model for distribution as it creates a memorable shared experience with others combined with the brand event…and not just 3 minutes of head swiveling with a cardboard headset.
