What are the profits for a VR games venue?

When you decide to get started, after having studied the cost of your VR room and its loan, you wonder how to amortize the investments made, reach the breakeven point and improve the profit of your room. The question of the depreciation of its VR room is crucial.

In a new market, most players are struggling to find the right pricing, overhead, customer experiences, and content strategy to be profitable. Some LBE VR manages to find this right combination and expand as franchises in different locations, while some still struggle to find the secret recipe. All of these players work hard every day to make their business successful. The challenge lies in understanding the market in which you will be operating: it is a new industry, with little data and with a lack of visibility on a business model that stands out for its efficiency.

This question will have a very different answer, if you want to launch a room with 4 workstations in the countryside, set up a complex of several thousand square meters, or a room in the hyper center of a big city with an extensive catalog of VR games.

To best study the profits of your VR room, here are some things to think about.

The market is still growing strongly and the first operators of virtual reality rooms have found it difficult to position themselves, to find the right business model and the right partners to obtain the desired profitability. According to our experience and what we see on the market, the rooms which quickly manage to open other points are those which have found an efficient business model which allows us o meet the demands of the customers but also to realize enough profits to reinvest them. in the development of their business (renewing equipment, content, improving processes, improving the customer experience, etc.)

According to Greenlight Insights, which focuses on augmented and virtual reality market research, the LBE VR market was worth $ 3.6 billion with a growth rate of 44% globally in 2019. And according to the study conducted by Forbes, who estimated that VR entertainment would more than double in 2018 to reach $ 1.2 billion. LBE VR is expected to reach more than $ 8 billion by the end of 2022, representing growth of 566% in 4 years.

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Profit from a VR venue define your business plan and find your business model The first expense of leisure space, in general, is the land. Depending on the size of your room, its location,and whether you buy or rent it, the profit of your room varies dramatically. Apart from higher operating costs, large premises with a lot of player positions often require additional staff to support players, and therefore additional salaries to add to fixed costs.

When finding your business plan, we advise you to calculate a fill rate of around 30%. Like any activity in the leisure market, the occupancy rate depends on your ability to attract your customers (therefore your communication expenses, your image, your commercial processes, etc.).

It is also important to choose the location and configuration of your location according to its catchment area, the choice of providers (especially your VR games partner for the use of the spaces), and its rent.

Indeed, moving away from the city center will allow you to have access to larger land, in commercial areas for example when it is more difficult and expensive to find these large spaces in the city center. The Octopod teams support you in your project and will advise you according to your project on the best strategy to adopt. Feel free to contact them.

To calculate the profit of your room it is important to have a good business model. To choose your business model, we advise you to approach the CCI in your region, which can assist you in its creation. You can use the Business Model Canvas following your research and studies to define it.

This will mean defining its strategy, its costs, its partners, its customers, its sources of income and its value proposition in your business model. A business model is essential to create and manage your business and will allow you to clarify your project and your profits.

According to the figures available to us, the profitability of a virtual reality room after two years of operation is around € 300,000 to € 500,000.

A room of 200 to 300 square meters, which can accommodate up to 20 people, requires an investment of around 200,000 euros. There are also operating costs of 200,000 to 250,000 euros per year.

The economic model of an LBE VR is based on several complementary and high-margin sources of income. In the case of our partner DreamAway: the privatization of its spaces for seminars and corporate events, revenue from general public reservations/gift vouchers, and royalties from its network of franchisees. The company is notably referenced within the largest groups (EDF, Enedis, Amazon, etc.), which enables it to ensure recurring income. With a 25% replayability rate, DreamAway proves that virtual reality is far from being a fad.

Profitability and profitability of its VR venue VR game equipment and licenses

Equipment adapted to virtual reality in leisure

The choice of VR hardware (especially headsets and PCs) for an LBE VR is crucial. Indeed, the choice of equipment in which you are going to invest is essential in order to guarantee a good user experience for your customers, a comfort of use around what will make your value proposition (namely the exploitation of games in virtual reality ), to have access to different VR content and thus renew your catalog.

Depending on the games (and therefore the VR technologies and spaces you are going to use), the equipment varies in particular on the type of VR headsets and the PCs used. The LBVR market is currently dominated by 5 headset manufacturers: HTC, Oculus, Valve, HP, and Samsung. The choice is wider on the PC side where several companies (including our partner LDLC.Pro) offer stationary PCs adapted to virtual reality and different brands of PC backpacks (backpack) allowing to move freely (free-roaming) in its play area.

The equipment used in your VR room must allow players to live a qualitative, immersive and non-reproducible experience at home.

The cost of purchasing and depreciating this equipment must be factored into your business plan and in calculating your profits. However, quality is not to be neglected, it allows for better computing power and display.

Therefore, if the experiences are conclusive (that is to say if they allow users to experience sensations), the players will want to start over and relive other experiences, making the sector more buoyant and therefore allowing to make your VR room profitable more quickly.

Depending on the space available in the room and the games chosen, our teams recommend certain very specific helmets.

For games in small spaces, (from 4 to 9m2) our box/pod games are compatible with HTC Vive, Oculus Rift and Valve Index headsets. For free-roaming games in rooms ranging from 14 to 20 m2, the HTC Vive Pro is recommended For free-roaming games in rooms of more than 200 m2 (therefore free-roaming), “Windows Mixed Reality” headsets and HP Reverb G1, G2 or Samsung Odyssey headsets are recommended.

Do not hesitate to contact the Octopod VR teams to discuss the equipment to use in your LBVR. They will also put you in contact with the various partners of the solution to obtain the best prices for your equipment.

When calculating the profit of your VR room and the renewal of your machines, the speed of the market must be taken into account. Much used and innovative equipment today can become obsolete with the release of new headphones. You will probably have to change equipment regularly. In the depreciation of a VR room, it is assumed that the renewal rate is applied annually to the installed base of VR headsets is 15%. As for computer stations, they can be kept between 6 and 7 years.

To provide the best user experience, you can bet on accessories. They are another expense item and therefore another depreciation to take into account, but they can help you differentiate yourself or to make players want to come back to your VR room (and thus increase the profit of their room). The accessories participate in the immersion in the user experience. VR involves extensive accessorization to be as immersive as possible.

VR game licenses adapted to virtual reality rooms

Another essential element of your project to open a virtual reality room, the game licenses dedicated to professionals. Depending on the studio you go through, access to game licenses can take different forms (monthly subscription, purchase of lifetime licenses, monthly license, percentage of turnover, pricing per game, per minute,etc. ).

With the evolution of the market, fewer and fewer operators are moving towards the purchase of lifetime licenses and favor pricing per minute or part itoavoid investing too heavily in games and services. '' engage in the long term with licenses.

The Octopod VR solution provides access to all the games available in a catalog (box, room-scale, warehouse) depending on the VR spaces you have selected. The games in the catalog having different durations and being configurable, the invoicing of Octopod games is done either by the minute or by the game (depending on the studio) with a monthly payment.

Increase profit through communication

Investing in the communication and promotion of your room is a mandatory step for opening a VR room, but also throughout your operation for the acquisition of customers. This communication must therefore be budgeted in advance in your business plan. Several communication levers can be activated to improve the profit of a VR venue :

• Inauguration of the place
• Creation and maintenance of a website (provide online payment)
• Promotion tools (flyers, brochures, goodies etc.)
• Press relations (especially with local newspapers)
• Partnerships with prescribers and influencers
• The creation and animation of social networks (Community Management)
• Social media advertising
• The referencing of your room: tripadvisor, where to go out, google (maps, SEO, SEA) ...
• Approach, prospect, make yourself known to companies, institutions, press and design various commercial offers including privatization offers to be widely distributed.

We recommend that you plan according to your budget to provide 10% of your overall budget for these communication actions and 1% (between 1 and 2k € / month) for recurring communication.

You will understand, to make profitable and therefore improve the profit of your virtual reality games room, it is essential to have smooth and efficient communication. ITopublicize and therefore make profitable an LBE VR, it could be interesting to hire a sales representative dedicated to the development and privatization of your room (the bulk of your turnover) by companies, or to events such as stag parties, birthdays etc. In general, if the development and communication are effective, the breakeven point (and therefore the profit!) Of a VR room is reached within 6 months of its opening.

Improve the profitability and profit of its VR room through the choice of content

Choosing the games and experiences to offer in your VR room is essential. Indeed, it will allow a better occupancy rate, good customer replayability and therefore an improvement in the profit of your room. As the audience for LBE VR is not the same as the one who uses home VR or gamers, it is essential to have a catalog of VR games adapted to each type of customer.

Indeed, you will meet in your room a large panel of customers, with desires and different degrees of knowledge of video games or virtual reality. Through its catalog of more than fifteen multiplayer games, Octopod responds to a very large majority of customer desires and requests (shooter, family, cooperative, zombies, children, competitive, adventure / exploration, etc.).

According to a study carried out by us with our customers, customers of virtual reality rooms are essentially looking for multiplayer, cooperative or competitive experiences, of a short duration (<1 hour) where it is possible to communicate and exchange .

Having a catalog of quality games, developed especially for professionals in the field (taking their issues into account), will allow you to achieve your objectives in terms of fill rate and recurrence and therefore profit.

Conclusion

The profitability and profit of a virtual reality games venue are therefore strongly linked to many factors. The ideal recipe has still not been found in this exciting, highly technological and constantly evolving market. Nevertheless, several players succeed in being profitable and thus develop their franchise networks. Like any leisure activity, or business, it is a question of defining a strategy upstream of your project according to your budget, your team and your skills.

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