#1205 – Reality Hits Tech Sector!

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The developments of a fractured market, and the growing pressures of the cost-of-living crisis and international events, are all impacting spending and culminating in the perfect storm for our industries. The drive for entertainment continues unabated, but the investments now are focused much closer to home. Although no one is saying “Staycation” (yet), the need for regional, rather than international, development is driving much of the focus.

Continuing Layoffs, Mergers and Acquisitions

The latest developments in the park and resort business saw the privately held themed entertainment company Herschend Enterprise acquire control of the Callaway Resort and Gardens. This deal for a $20m investment will see the Georgia-based resort fall under control of the operation which already runs some four other resort/park locations – and is the largest family-owned themed attraction and entertainment company in the market.

Another major announcement came from South Korea – with the news that the Lotte Group of themed entertainment venues had divested its Chinese holdings. As reported, the company is offloading its interest in its Chinese-based theme park projects (‘Lotte Town’ in Shenyang’), to a local Chinese enterprise, for some $327m. This move was reported to be instigated as part of Lotte Groups reshaping its business strategy to focus on its successful local Korean business. The group is reporting a 9-percent increase in operating profits from its Lotte World theme park operation, looking towards maximizing these record returns, and looking to actively expanding its entertainment portfolio, through strategic partnerships and alliances. Ultimately, the group is focusing on growing its core business and looking towards future opportunities.

Also reported was the news that Bowlero had acquired the largest bowling center in the US. Thunderbowl Lanes in Allen Park, Michigan, will now join the extensive chain of Bowlero operations, representing some 98,000-sq.ft., in its largest acquisition of a facility, representing some 90 bowling lanes and extensive amusement offering. This adds to some 325 facilities run by the operation in the US.

Reports suggest that the Location Based Entertainment (LBE) business is about to see a major growth spurt – with a trajectory anticipated to see a rise from the calculated 2023 $3.4b valuation, to rise in 2030 to some $19b. This growth is set to be achieved through the leveraging of XR technology and creating engaging interactive experiences for customers. The LBE international sector was seen to have an incredibly strong Compound Annual Growth Rate (CAGR) and is expected to see continued investment. This was all outlined in a market report by MarketDigits, a business research firm. While the actual valuation will be up for conjecture, the reality is that LBE is still riding high following the global lockdowns, and there is still much investment in physical entertainment property spaces.

Consumer Electronics and Gaming Continue to Feel the Pain

As we charted previously when covering The Stinger Report’s 30th Anniversary, major developments have been seen across the consumer videogames media, but the reality is that these developments are happening across the whole of the sector, in what has been defined as the “Consumer Videogame Job Apocalypse”. The latest aspect of this saw the announcement that Take Two was planning to lay off 5-percent of its workforce, estimated at some 580 positions, by the end of the year. This is the third reduction plan put in place since February 2023. It was later revealed that some 70 workers were being let go across the corporation’s game studios, and this would see several eagerly anticipated titles being placed into limbo. This also includes Take Two closing their Seattle offices, resulting in the shuttering of Intercept Games, located in these premises.

Following this, Microsoft was linked to plans regarding their ZeniMax branch of Xbox Game Studios, following the recent acquisition, and is now looking to close developers Arkane Austin, Tango Gameworks, and Alpha Dog Games. This follows the Microsoft layoffs in January, of some 1,900 employees across the corporation – especially at the recently-acquired Activision Blizzard. This latest announcement added to the doom-and-gloom atmosphere surrounding the consumer game development community. Regarding VR game development, the impacts of M&A are a continuing presence. It was announced that Carbon Studios S.A, famous for ‘Alice VR’, had acquired fellow developer Iron VR. This includes collecting development resources, as well as projects that were in development, towards growing the operation.

The impact of game development layoffs is hitting developers involved in some successful AAA releases. Looking at the AR landscape, the co-developer behind multi-million downloaded ‘Pokémon Go’, just announced their own major restructuring. Very Very Spaceship announced they intend to make layoffs within the studio, although the exact number is still to be revealed. The company was most recently working on an update of the character set for the still hugely popular scavenger hunt AR title. Developed in collaboration with Niantic, the studio had been reported to be working on another game with the corporation but, as of this time, its continued plans were not revealed. Reports that Niantic were releasing their own MR glasses ended after parting ways with Microsoft, and the company is now releasing a new MR game for the Meta Quest 3 platform, called ‘Hello Dot’, which they hope will be a successor to the AR ‘Pokémon Go’ phenomenon.

The situation regarding the ongoing restructuring in the sector was brought into sharp relief with the news that technology giant Apple would be undertaking restructuring of its own, that will see some 600 within its workforces laid off. This reduction will mainly impact the corporation’s Californian offices and is part of a reduction in workforce to address the corporation’s refocusing of business. The impacts of AI, and the post-pandemic landscape are shaping these developments, with Apple already announcing the abandonment of its over-ten-year project to create a self-driving electric car – with resulting job losses.

Tech Sector Feels XR Heat

The developments and upheaval in the consumer videogames sector were also reflected across the “Tech Sector” – especially those associated with the consumer XR landscape.

Staying with Apple, and plans to enter the Spatial Computing sector with their Apple Vision Pro – they have been receiving some negative media backlash. As reported by several mainstream tabloids, owners of the Vision Pro have been reporting neck pains, migraines, and eyestrain. At the same time, reports suggest a high number of returns of purchased systems by new users. It was difficult to ascertain if these reports were from the anti-Apple lobby, or if there were serious issues with the headset that comes in at a hefty $3,500 price tag, and has been called “innovative but heavy” by some users. Just as this news was being presented, the Wall Street Journal reported that Apple was approaching leading corporations towards enquiring if they would consider applying the Vision Pro in their business development and training. If true, this is a major pivot from the core consumer sales approach – and seems to indicate a move by the corporation to increase market penetration.

Contested media analysis suggested that Apple’s sales expectation with shipment plans had been impacted, going from 700k to now only 450k – with statements suggesting sales have fallen sharply beyond expectations at Apple. Chinese sources close to Apple’s fabrication operation suggest management is reviewing and adjusting the headset’s roadmap, although these reports were refuted by other sources (a situation that is alienating many to the fanaticism of support shown by each camp). Those same Chinese sources also suggested that a new Apple Vision Lite was being targeted for a 2025 launch in May (ahead of previous speculation of a September date). This would be a lower-price and lower-weight version, following a smartphone style progression path, hoping to achieve better market adoption.

How much Apple was concerned by the initial reaction to their MR platform gamble was difficult to gauge. But it was revealed that one of the major architects who had shaped the rollout of the Apple Vision Pro, Apple’s senior marketing head – a 35-year veteran of the corporation – had announced his surprise retirement. Tellingly, with no successor named at the time of the announcement. Having been only named the Head of Marketing for Augmented Reality and VR in 2019, which included responsibility for the launch of the new initiative, his departure has some wondering the future of this platform.

Reflecting the impacted conditions in VR, the consumer scene was rocked by the news that Meta will be pivoting away from a walled eco-system and looking to offer their technology as an open platform. This follows on from our previous coverage on the tempestuous conditions following the ten-year-anniversary of the acquisition of Oculus. What the founder of Meta called their ‘Meta Metaverse OS’, this new operating system will be made available to partner companies to apply in their hardware and will also see the notorious closed ecosystem of the Quest Store opened to new content providers previously excluded. This move was dubbed as Meta looking to make their XR investment open to others, such as seen with Android for smartphones. This counters what was called the closed environment of Apple, and what they intend to do with their Apple Vision Pro.

This is a complete pivot from previous business plans by Meta and reveals how much they have stumbled over the previous years in trying to control and dominate the VR landscape. Partnerships were revealed with Microsoft towards developing a limited-edition VR headset for Xbox game playing (based on Quest 3), as well as partnerships with Lenovo (previously a partner on the short-lived Rift-S VR headset), focusing on productivity and educational, along with ASUS and previously-revealed LG partnerships – these third-party headsets are looking at specific user cases, rather than generic hardware. Meta proposed that their new OS will support one-off headsets for specific applications, like watch media, playing games, and educational applications. Meta is at pains to claim they will continue to develop their range of XR headsets. Many observers are pointing to the similarity of this news compared to the previous partnership Oculus had with Samsung, to support the GearVR platform back in 2015.

This move comes after Meta had closed the door on an open OS partnership with Google. Now, Meta seems to be rushing to try and create an open standard XR environment, as Apple launches their hardware, and Samsung and partner Google ready to launch their XR entry (with their own XR OS plans). The notorious history of the Meta app store, and how it has been a hindrance to the wider circulation of VR content, speaks volumes regarding this pivot by Meta – faced with the failure of their original plans. The new store front will be called ‘Meta Horizon Store’ – rolled out in phases towards a unified store (with the closing of the App Lab store starting this process). This development marks the latest move in the corporation’s Metaverse aspirations, hoping to paper over the failure to retain any of the promised numbers of users to their curated VR environment. Having stifled innovation not controlled by their empire, Meta now hopes they can be instrumental in controlling what comes next, after such a massive investment into their previous business plan.

Speculation is rife that, with the launch of these new partnered Meta Horizon OS headsets, the need to continue to subsidize their own VR headsets will be sidelined, with more layoffs expected from the Meta Reality Labs team – suggested as inevitable with the migration to an OS focus (no matter the claims of still having a hardware roadmap). Meta will now focus on being the de facto operating platform for both their third-party and their remaining headsets, with a strategy which hopes to control the distribution of content and apps, rather than hoping to force everyone onto their own hardware exclusively. This is a major pivot in the business approach, with a realisation that the previous domineering attitude of the last ten years has now had to change and, with that, the abandoning of previous closed eco-system behaviour. This move mirrors what Microsoft had previously attempted with their infamous Windows MR ecosystem. As well as stomping all over what the OpenXR initiative had been attempting.

With Apple seeing major changes in governance, and with rumors of impacted reaction to their MR platform, and Meta deciding to embrace third-party support against their original plans, it becomes clear that consumer VR and MR is undergoing a major restructuring, no matter the positive spin many vested interests have tried to impart on the changing conditions. Many observers are now waiting for the next developments, with the entry of Samsung and Googles into this scene, along with the first of the Meta Horizon OS supported headsets. There is also the situation surrounding outliers such as HTC, DPVR and PICO, who are still to play their next hand.

The results of a slowing consumer retention in VR have also been seen to impact Sony. The corporation was reported to have called their investment in growing the VR adoption of their PSVR2 platform a “challenging category”. It became obvious that the corporation was undertaking a major rethink in this investment, with the announcement of the closure of several studios that were developing VR content for the platform, including laying off all the staff at Firesprite studios. This news was soon followed by the reveal that the game developer behind one of the VR platform’s most successful titles had been fired – a seven-year veteran of the corporation. This latest development comes as Sony runs a sale of its VR range, and sources suggest a cooling off towards continued further investment.

The volatility of the consumer VR market is best illustrated with the news of the insolvency of one of the many hopeful VR startups that had been given high praise and big expectations. Holoride announced on social media that it had fallen into insolvency, after planned investment deals had fallen through at the last minute. The company, originally spun out of automaker Audi as a VR in-car entertainment platform using VR headsets, had seen a valuation of some $30m and had raised some $12m in 2022. The company had promoted, at the 2019 CES show in partnership with Audi and developer Terranet, their in-car VR system, as advised by a promoted specialist on the best route to market. However, media reports on the actual experience still raised questions regarding the effective nature of in-car virtual reality, and susceptibility that some had to motion sickness induced by the process. The considerable hype and promotion the platform received seems to have not materialized, as the company now folds. This is seen as the beginning of another series of “restructurings” to impact this turbulent sector – investors are now wanting to see the reality of the original VR business claims.

About the author call_made


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The brainchild of two location-based experience enthusiasts, Christine Buhr and Brandon Willey, the LBX Collective aims to inform and educate, create opportunities to connect with industry peers, and to spur collaboration, discourse, and cross-pollination of ideas.

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