One of the biggest problems for many working in the new XR industry is how to make money in the middle.
As part of this week’s Cannes XR program, Jingshu Chen, co-founder of the VR entertainment platform VeeR, will give a keynote lecture trying to address the issue.
Beijing-based VeeR distributes, produces and invests in VR narrative content, and also operates the VR movie chain ZeroSpace in China.
Chen’s July 9 keynote lecture, titled “Distribution and Monetization of Cinematic Virtual Reality Content,” comes at a time when the hype around the medium has come true.
Reflecting on the growing pains of virtual reality, Chen refers to Gartner’s famous “Hype Cycle for Emerging Technologies”. Offers such as the acquisition of Facebook by Oculus in 2014 caused a “peak of inflated expectations”, which gave way to a “landfill of disappointment” from 2017 amid slow headset sales , technological problems, lack of content and many RV companies retiring from the industry.
But, according to Chen, virtual reality could once again be on Gartner’s “pending enlightenment”. He cites the growing sales of virtual reality headsets, particularly the attractively priced Oculus Quest 2, launched last year. According to her, the content of the games is “taking off.”
In fact, in February, Facebook said 60 games and virtual reality apps from the Oculus Quest VR headset platform generated revenue of more than $ 1 million. Six titles have generated more than $ 10 million in revenue on the Quest platform, including Beat Saber and Population: One.
Omdia analysts estimate that 2.3 million Quest 2s were sold worldwide in the last quarter of 2020 and that headphones should be able to reach 5.1 million sales by 2021.
In his latest report, “Facebook, VR and the Future of Advertising,” Omdia concludes that virtual reality is shaking up its trick image and taking small steps to become a mass market proposition.
However, Omdia’s lead analyst George Jijiashvili says household penetration remains small, only 1.2% in the top 32 countries. “This could grow to 5% by 2025, highlighting the long road to mass adoption by RV,” says Jijiashvili.
Total revenue from VR content stood at just $ 1.1 billion in 2020. That sounds impressive, but it’s “just a drop in the ocean in the context of total spending of $ 168 billion on games in 2020.” , explains Jijiashvili. He adds that RV fights for the attention of users in a world full of content, from YouTube and Netflix to social media and gaming platforms.
For creators and distributors of narrative virtual reality content, breaking this already narrow market remains very difficult. To make matters worse, headphone manufacturers seem decidedly focused on the gaming market, amid signs that early adopters come largely from the gaming community. RV creators and distributors complain that, for example, Oculus is not “friendly” with narrative RV and makes it difficult to launch independent paid content or aggregators in the Quest store.
Very few pieces of narrative content have made money due to limited distribution, says Jeffrey Travis, CEO of VR technology and theater firm Positron. “A lot of times, VR narrative content just won’t be discovered by the public, because they don’t know where to find it.” Travis claims that the fact that headphone manufacturers are focusing on games has meant a “lack of interest in promoting film content.”
Both VeeR’s Chen and Positron’s Travis say that right now, the big opportunity for content creators lies in monetization through location-based entertainment (LBE) VR, especially now that many theaters around the world are ‘open again amid a successful vaccination against the Covid-19 exits.
Chen says VeeR is investing in the construction of its ZeroSpace brand VR movie chain in China, where it now has 30 outlets. She says cinemas attract a wide audience eager to experience virtual reality narratives, not just the types of male games that have been the first adopters of headphones. For example, Chen reports that 55% of LBE VR audiences are women, compared to 45% men. She believes it will take a few more years for virtual reality headsets to become conventional. Meanwhile, Chen says, “location-based VR cinema is a faster way to get VR content into the mainstream.”
Similarly, Travis says Positron sees a growing demand for its theatrical services. The company equips virtual reality theaters with its full-motion Voyager VR chair platform and supports licensed software and content. This year it supplies five new VR cinemas in locations such as Melbourne, Houston and Yosemite National Park. Travis says, “When you look at the projections of XR’s narrative content, it’s clear that in the short to medium term, the financial return is much greater in location-based entertainment than at home.”