Blockchain based franchise: VRT World practice and outlook
A franchise is one of the popular ways to expand a business. Throughout the world, this model has been actively used since the second half of the XX century, in the Russian Federation — since the early 90s. Under the scheme of franchising, dozens of companies expanded business to global market to (for example — McDonald’s and Subway). In the IT sector, the main trends of which at the moment are VR / AR and blockchain, the franchise schemes are also exist. In this article we will tell you what are the main differences of this model from traditional business models, come across some successful and unsuccessful cases and turn to the practice of VRT World in this field.
What is a franchise
Franchise assumes that the first party, the franchisor (the owner of the main business), allows the other party, the franchisee, to engage in business in a well-established scheme and using the promoted brand. Benefits for the franchisee are as follows:
· Already have loyal customers;
· At hand — a proven (profitable!) Business model;
· The franchisee is part of the franchise, that is, the large family of the main company, and partners are usually offered better conditions;
· Global advertising is the concern of the franchisor.
Of course, risks are not ruled out, staff can be searched / trained independently, engaged in local promotion, equipment purchase, etc. — too. And do not forget about franchise fee — royalties in favor of the franchisor (he needs to consult a partner, prepare packages of documents, etc.). It’s about:
· Royalties — regular payments (flat rate, interest from margin / margin, percentage of sales);
· Or a lump-sum fee — a one-time fee for joining a franchise network.
We give you an example from the gaming business. In 2013, the Russian Federation launched the IGN Russia edition under the franchise. The American version of IGN (the fourth most visited website in the world according to statistics similarweb.com, under the franchise agreement there are more than two dozen regional branches) belongs to Ziff Davis — the owner of the license required, by one estimate, a monthly payment of $ 5–10 thousand (with the potential profitability of the Russian-language project in the $ 5–15 thousand), on the other — $ 50 thousand per year. As a result, for five years, the publication IGN Russia has not become profitable.
Blockchain for franchise
Here are the advantages of blockchain for VRT World, which is about to launch worldwide virtual reality park network and decentralized marketplace VRT World (with tools for developers to create content and an emulator where products can be tested):
1. Transparent distribution of income between the platform and the developers. The commission, as is customary in projects on the detachment, is the minimum possible. This is important, if you consider, the largest gaming shop Steam takes away from developers 30% of the profit;
2. Guarantee of observance of copyrights;
3. Instant license fees (in platform tokens), not constrained by regional restrictions and without the involvement of intermediaries;
4. An opportunity for developers to organize a fast crowd-funding / collecting donations for a product in which users are interested.
As you can see, the blockchain leaves behind many common disadvantages of franchises. And again, back to VRT World. The first Z8 VR-park was opened in Moscow in mid-December 2017. Now the partners of the project from Europe have bought out rights to launch 30 more parks within 18 months. Within two years VRT World will enter the markets of the USA, China, Japan, South Korea and the UAE. The number of VR-parks in four years will be 170. Without blocking so rapid growth and interest from investors would hardly have been possible.
Successful and unsuccessful cases
As promised, we turn to the recent successful and unsuccessful cases. In September-October, ICO Unikrn (based in Seattle, USA), a betting service for e-sports contests owned by a well-known venture capitalist Mark Cuban (owner of the Dallas Mavericks basketball franchise) took place. ICO was successful — $ 31.4 million was attracted.
Earlier, Unikoins were used for betting on the Unikrn platform, which has branches in a number of countries. They were replaced with cryptotenes UnikoinGold — more reliable, because now transactions are conducted on the block. The field of online gambling is constantly growing, and Unikrn is in a winning position due to the blockbuster.
ICO of Russian firm AltoCar (service of personalized taxi), on the contrary, turned out to be unsuccessful. On investment, the company planned to scale up business and seize all 13 domestic cities with a population of over 1 million people. Indicators in his native Kazan were not bad — more than 90 thousand trips and revenue of more than $ 0.5 million. The attractiveness of the service is explained by the fact that the driver you like can be added to the “Favorites” and in the future can only be called by him — in fact, a personal chauffeur at the price of an ordinary taxi.
AltoCar intended to pour the ALTC tokens into the program of encouraging drivers and partners, to allow them to pay for their trips and sell them for a franchise. The last point seemed AltoCar solution to the problem of opening foreign representations. Alas, despite the collection of $ 0.3 million for pre-order tokens, ICO softcap was not achieved.
VRT World franchise and VR Market
According to Goldman Sachs, the audience of gamers in the world is now 380 million, taking into account the viewers of online broadcasts (YouTube, Twitch, etc.) — over 1 billion. It is obvious that the games are the main driver of VR growth for the coming years.
In 2016, corporate and venture capital investments in VR / AR amounted to $ 2.3 billion (Digi-Capital). AVRA, the domestic Association of Augmented and Virtual Reality, considered that in 2015–2016. investments in VR / AR in the Russian Federation increased from 200 to 700 million rubles, and the number of companies working in this sphere jumped from 60 to 183. The relevant organizations were interested in such large organizations as Gazprom, Rosatom and Sberbank. In 2016, Sistema VC, a venture fund of AFK Sistema, invested in the MEL service, which offers to develop students using VR / AR technologies, $ 2.5 million.
The main players in the sphere of virtual reality sets at the moment are Sony, Facebook, HTC, Samsung and Google. On the PC, the popularization of the sphere is constrained by the high cost of helmets and additional equipment. So, only 0.2% of Steam users own HTC Vive and Oculus Rift glasses. The audience of the service is 67 million people, that is, VR accounts for 134 thousand Valve, which belongs to Steam, sells Vive helmets together with HTC. It is possible that Valve, dejected by the failure to distribute the franchise model Steam Machines, simply fears aggressively promote VR.
On the other hand, we have an exemplary example of Sony. In just one year, the Japanese corporation sold 2 million points of PlayStation VR and 12.2 million games for them.
Decisive measures are also prepared by Facebook, which at one time bought Oculus VR for $ 2.3 billion. In early 2018, sales of the upgraded Oculus Go helmet (variation of the Oculus Rift), which does not need any external equipment, will start. The price is only $ 200, which is two less than the PlayStation VR and three times Oculus Rift.
By early 2017, manufacturers had sold 18 million VR-headsets (over 50% — it’s unpretentious Google Cardboard). By 2021, this figure should grow to 67 million, and spending on VR / AR services and goods — up to $ 100–200 billion, according to various estimates. The most significant part of the proceeds will be brought by games.
Russia, as you can judge from the figures above, did not escape the VR-boom. VR-games are developed by the largest companies like Mail.ru. In November-December 2017, the first eSports tournament for the VR-game (RevolVR), which covered seven cities, was held.
Of course, some projects in virtual reality find investors only because of the hype, not having behind the technological base, experience in the industry and unique developments. VRT World solves real problems and relies on a viable business model.
VRT World ICO is scheduled for February 27 — March 27. Hardcap — $ 16 million, and already at the stage of pre-sale involved $ 0.67 million. VRT tokens will eventually grow in price, as some of them the company intends to destroy (they are allowed to pay a contribution under a franchise and in part — the entrance to the VR -a park). Plus, with the expansion of the service, Metcalfe’s law will be included in the matter.
From the second quarter of 2018, 3–5 VRT World parks should be opened on a monthly basis around the world, so they should be 15–20 to start the blockchain based platform. That network of parks will be the first customer of VR-content. Also, the company will take care of the fund to reward developers for the original solutions in the field of virtual reality.
Despite the lack of large players in the market, VRT World will spend 15–25% on the funds raised during the ICO for marketing needs. To a large extent, these investments will improve the industry itself. VRT World also plans to expand its business by transferring games taht was originally adapted for parks to PC and PS4, launching a cybersport league (by the end of 2019) and streaming service in VR (late 2020). All these initiatives will make the virtual reality market truly massive.
Co-author: Dmitry Nazarov
