What is VR and why should I be investing in it?
First of all, let’s quickly explain what VR is and why it’s a very worthwhile industry to be tapping into – as either a licensee or a franchisee. The first clue is in the name – virtual reality is all about experiencing a world that doesn’t exist for you. This technology allows people to do all sorts of wild and wonderful things, from annihilating zombies to visiting the Louvre without stepping on a plane.
VR is created by computers that allow users to experience and interact with a 3D world that isn't real, using head-mounted displays and input tracking to create the illusion. The display is typically split between the eyes, creating a stereoscopic 3D effect with stereo sound. When coupled with technology and input tracking, it creates an immersive, believable experience that is ripe for exploration – so it’s no wonder that this particular field is starting to gain commercial traction. According to figures from Grandview Research, the global virtual reality market was valued at USD 21.83 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 15% from 2022 to 2030.
So, how can virtual reality help you make money? It’s all in the location-based entertainment (LBE) sector. Forbes states that by 2023, it’s predicted that LBE will make up around 11% of the VR industry. The appetite for unique, shared entertainment experiences is growing every year, with free-roam VR companies tapping into the global market. Companies like Zero Latency VR offer something that consumers can’t get at home by popping on a headset – it’s a fine-tuned location-based experience that can be shared with others. The growth rate speaks for itself – with 57 venues across 26 countries, people are loving this next generation of immersive entertainment.
VR licensing pros
If you’ve done your research and reached out to various VR licensing companies, this option can be quite lucrative – especially if you are the first (or amongst the first) in your particular locality to tap into the VR market. Engaging in a licensing agreement with a reputable VR company can give you access to the hardware and software that you need to build your own successful VR arcade business, from the headsets to the games and everything in between. After some location scouting and sorting out your overheads, it’s a matter of engaging the licensor to acquire all of the technology that you need to create your own business. Things like VR headsets, backpacks, controllers, content servers, and management software are all available to obtain.
VR licensing cons
Striking the right balance in your VR licensing journey can be challenging. To achieve and maintain sustainable profitability, you have to be diligent with your licensing costs. Key aspects to consider when choosing licensed VR content include building a core of loyal repeat customers who will recommend you, pricing for weekly or monthly repeat business, and having enough resources to counter-balance between high-traffic times (weekends) and slower periods (weekdays). Finding the sweet spot between your price point, overheads, customer experience, equipment, and content is tricky but crucial.
VR franchising pros
A VR gaming franchise can end up being quite a lucrative venture if you play your cards right, taking into account your physical location, your budget, and your competitors in the area. Perhaps the biggest advantage of taking on a VR franchise is in the cost, as starting your own business from scratch can be incredibly expensive. VR equipment alone is quite a solid investment, and then you have to factor in rent, internet, and other utility bills – it all stacks up pretty quickly. VR franchising also allows you the benefit of leaning on an established business – essentially, the grunt work of market research, equipment sourcing, and even back-end operations has already been taken care of. This significantly reduces the cost and stress involved in starting a VR business.
VR franchising cons
As with any franchising opportunity, there are some drawbacks that you need to consider. Perhaps the most obvious is the reduced creative control that you surrender when entering a franchise agreement. The franchisor has already figured out their formula for success, so all you have to do is follow it – but this can lead to inflexibility when it comes to the content and equipment that you are able to incorporate into your VR business. Not being able to have creative control over certain aspects of your business can be off-putting for some people, while others are more comforted by the guidance and support offered by their franchisor.
Which is a better option for me?
When choosing between franchising or licensing your VR business, it’s important to evaluate your overall goals and current needs. Here’s a quick reminder to help guide you in the right direction.
The case for VR franchising
- The security of an established brand to back you up
- More support in terms of the physical and technical aspects of starting a business
The case against VR franchising
- Reduced freedom and flexibility with running your business
- Lack of creative control
The case for VR licensing
- Recognizable branding will help to grow your business fast
- Access to the hardware and software you need to create a thriving business
The case against VR licensing
- Less hands-on support, which can be daunting if you are not experienced with business
- Finding your sweet spot with licensing costs
At the end of the day, you need to do what’s best for you and what you are comfortable with. The team at Zero Latency VR is always happy to help you on your journey to becoming a VR gaming licensee. If you are ready to level up your business and blaze a trail in the rapidly growing location-based entertainment, get in touch with Zero Latency VR today.
