#1184 – Consuming New Entertainment!

Just before we are inundated by exclusive coverage of the trends and developments from the Orlando show floor with IAAPA 2023 – and we turn to developments in the consumer VR and IP scene with serious ramifications to the amusement and attraction scene. 

Consumer VR Reality

While we ready for IAAPA’23, and a show floor populated with successful commercial VR, we consider the following question: what about home VR, and its possible impact? 

It has been reported by numerous sources that expectations for sales of consumer VR headsets have not been met. The reality of the high expectations of millions upon millions of sales of the current phase of VR headsets have not materialized – many are now feeling they were overly optimistic, if not delusional. 

The highest selling consumer VR headset has been seen as the Meta Quest 2 – with some 10m speculated to have been sold over its three years of deployment. This represents 50-percent of sales of all Meta VR equipment (although does not include the 8m sales that Samsung achieved with the GearVR). This comprises most of the business, with the nearest consumer sales coming from the Sony PSVR and PSVR2 console VR system, and the other manufacturers (DPVR, HTC, PICO, Pimax, and others). 

Estimates of a 2022 market size for VR of $59b, with continued growth of 27-percent year-on-year to 2030, are failing to hit any milestones proffered. It was obvious that these high hopes in sales – with some corporations such as Meta promising a billion users on their headsets before the start of 2024 – had severely misjudged the market, over hyping the opportunity. More level-headed senior executive teams are now starting to redress the situation. This was first seen with HP shuttering their VR headset manufacturing division (although at the time this was denied, and many have attempted to ignore this closure). It seems now that another prominent VR headset corporation, after massive investment, is backtracking on its VR investment.  

It was reported at first that sources close to PICO Interactive (acquired in 2018 for $600m, by massive Chinese corporation ByteDance, and owner of TikTok), would be shuttering its consumer VR division. After strenuous denials, rumors continued to persist. Finally, it was revealed by Forbes that staffers at PICO would be impacted by a round of layoffs and that the operation would be undertaking restructuring. A private meeting was held in November where staffers were informed of the scaling back of the VR division, especially in marketing and development. This news confirmed what previously had been denied.  

The reason for the move was suggested that the ByteDance board was disappointed in what has really been achieved, and the failure of VR development to live up to the promised returns. Meanwhile, at the same time, we are seeing a pivot away from VR for MR after the reaction to the Apple VisionPro reveal. Along with continuation of Enterprise business (see IAAPA’23 coverage), a skeleton development resource reported to be retained following these layoffs and restructuring at PICO, to develop a competitor to Apple’s vision. Other previous heavily-invested VR developers, such as Samsung and Google, have also sidelined previous VR specific projects, towards creating their own MR platforms. Samsung is reported to be looking at a MR headset release for Q4 2024, through an ‘XR Alliance’ with other developers (codenamed ‘Infinite’). 

The senior executive boards across the scene have been greatly disappointed in consumer VR, by what has been achieved in user retention, physical unit sales (which have been already heavily subsidized), and the failure to hit any of the targets for software or user penetration. Those staffers who had promoted these heavily-hyped sales promises, have started to be replaced, with massive layoffs seen across studios and manufacturers. The PICO situation is being confirmed by the laying off of the entire team working on the VR title ‘Blitz Rhythm’, a VR game hoping to be an alternative to Meta’s ‘Beat Saber’ (which has now been cancelled). With this closure and immediate layoffs, the validity of the previous rumors gained momentum – with concerns of more information on the impact of the restructuring coming soon.

Meta has already been covered in The Stinger Report regarding the layoffs and restructuring of the VR and AR plans. More recently, industry sources suggested that Meta had signed an agreement with Chinese corporation Tencent towards achieving their previous hopes of releasing a cheap ‘Meta Quest 3 Lite’ (tentative name). This was first rumored by the WSJ in a February report, but has gained ground, now being described as a “provisional” agreement between Meta and Tencent – this allows the Chinese games giant to enter the VR scene, and offer an ‘Apple VisionPro’ competitor, while Meta would get their hoped headset at a price they feel the market can tolerate. This the latest attempt at establishing a Chinese footing after failed previous collaborations.  

 At the same time, other executives seemed to be pivoting from the hype for VR, to the opportunity of MR as Apple’s VisionPro reveals hopes to offer a new chance to jump on the technology bandwagon. However, Apple are focused on a non-VR or MR approach, what they see as a “Spatial Computer” platform avoiding all association with VR – and so, leaving the vast investment by other corporations into an expected VR future high-and-dry. New processing technology is now being developed in this direction, as seen with Qualcomm announcing their new Snapdragon X Elite processor, aimed to go toe-to-toe with Apple’s M3 chipset – all focused on a MR and not VR future.

But the reality of these MR/Spatial Computer headset releases, is that they are seen by the respective developers as early releases – Apple confirms they expect a limited production run for their VisionPro, and even suggest they would only be sold from Apple Stores. Likewise, Samsung has reported their new MR platform will be released in sub-30,000 numbers. As illustrated by the lacklustre adoption rate of the Meta QuestPro, the MR landscape has yet to be infused, and adoption is expected to be very slow for high priced items. If this market cannot be invigorated by these new releases, MR, like VR and AR, could be in for a bumpy ride.

2024 will see the high-watermark for VR – this is the last chance for the highly speculated consumer technology to prove the billion-dollar investment in sales and adoption. Many industry advisers are now attempting to fully pivot to supporting MR and Spatial Computing, sidestepping the previous grandiose promises for consumer VR. Apple’s VisionPro launch of their headset will hold the fate of much of the consumer VR community in its hands. Previous high hopes for Meta’s Quest 3 is seeming to slow, as original sales hopes failed to be met. The sector is now either seeing a pivot towards a Mixed Reality future, or a root-and-branch restructuring of the investment into VR, with ramifications expected for those corporations involved.  

With the pivot to MR over VR, along with the layoffs and abandonment of over-inflated business hype, another victim of these developments has been the much hyped “Metaverse”. Numerous news reports have covered the collapse in business support of “the Metaverse” – with the tech-industry and venture capital scene taking stock of their billion-dollar gamble on an idea that seemed half baked at best. Claims that individuals would spend hours-upon-hours navigating these virtual worlds and would drive creativity beyond what has already been achieved in Enterprise applications, have not been realised.

Roblox, Second Life, GorillaTag, and Fortnite have proven an interest in a social environment amongst gamers, and even VR users – but have not achieved any of the outlandish claims which were made about adoption of the purported “Metaverse”. As with the Blockchain compared with Crypto and NFTs, the fundamental idea may be strong but early adoption has been weak if not abortive. As with VR and AR, the reality seems to be that early attempts to define and dominate the fledgling market have failed. Now we seem to be pivoting to a new attempt to define the landscape, with MR, Spatial Computing, and the overarching XR approach – the question remains: will this be more successful? 

Videogame Fantastic

One element across the entertainment sphere has been that of Videogame characterisation (both current and retro). Videogame IP finds new profitable homes in the key spheres of movies, merchandising and licensing, specifically in Out-of-Home Entertainment. 

Movies – ‘Super Mario’ saw Nintendo’s titular mascot get big screen coverage, with the movie generating $1b in box office sales. Meanwhile, other video game powered movie successes saw ‘Five Nights at Freddies’, ‘Sonic The Hedgehog’, and even Disney’s ‘Wreck it Ralph’. Nintendo announced their latest movie IP with ‘The Legend of Zelda’ – targeted for a live-action feature which will be released by Sony Pictures. The latest video game iteration of the Zelda series release saw 10m copies sold across their popular Nintendo Switch handheld console.

Sony is no stranger to videogame IP based movies, with their adaptation for their racing property ‘Gran Turismo’ seeing a movie outing this year to mixed reviews. Numerous video game IP is now being targeted for screenwriting, with even Microsoft’s’ ‘Minecraft’ looking at a movie adaptation. Meanwhile, streaming services are also looking at movie videogame licenses. Videogame IP is replacing toy and boardgame IP franchises, previous seen with the ‘Transformers’ and ‘Jumanji’ box office properties. Disney has also seen success with IP based on their theme park attractions, with the epic ‘Pirates of the Caribbean’ series – however, seeing less success with the ‘Haunted Mansion’ big screen debut.  

At the same time, Walt Disney Company still looks to movie IP for their parks, with the news of the latest ‘Avatar’ themed gate coming to Walt Disneyland in the coming years, following the rollout of sequels of this massive property, following on the back of the Walt Disney World ‘Pandora: World of Avatar’ themed adventure (opened in 2017). 

LBE – Theme Parks have been quick to employ videogame IP, and we recently reported on the opening of the ‘Uncharted: The Enigma of Penitence’, at PortAventura World. Obviously, there is the phenomenal success of ‘Super Nintendo World’ for Universal Studios. Beyond the parks and resorts, Competitive Socializing (CompSoc) has been a major element of LBE adopting videogaming and IP to its new generation of developments. 

Venues like Platform, Loading Bar and NQ64: Arcade Bar, have opened in the UK, offering a mixture of videogame nostalgia and social gaming nights. NQ64 was founded in 2018 and the operation has ten sites, with two in Manchester, along with Birmingham, Liverpool, Cardiff, Newcastle, Scotland, and London – the company opened their second London venue, a 9,000-sq.ft. space in trendy Shoreditch. The company also revealed their plans for additional venues including Bristol.

CompSoc has also licensed strong IP to drop into experiences. The latest example sees Immersive Gamebox continuing their aggressive expansion plans with a new Shoreditch site, the latest in London, with a 3,600-sq.ft, location. The venue includes nine “Gameboxes” – the immersive enclosure system, employing the unique hat-mounted tracking system, offering a selection of games including licensed propertied such as ‘Squid Game’, ‘Angry Birds’, and ‘Paw Patrol’. The venue will also include new elements of a VIP room and bar for guests. We also reported on the collaboration agreement with Merlin Entertainment that will see Immersive Gamebox sites developed by the corporation.

Sony Creative Products division is linked to the development of a 1,200-sq.m. immersive entertainment venue to open in Tokyo – this LBE will be a flagship immersive venue based on Sony IP. Meanwhile, Dubai announced a new entertainment venue, offering a new take for the territory, with a Social Entertainment space called ‘777 Dubai’ (Triple Seven). Located at Radisson Blu Canal View in Business Bay Duba, the space is a child-free arcade, aiming for an adult-centric amusement space comprising classic video arcade machines such as ‘Street Fighter’ and ‘Pac-Man’, feeding heavily on the nostalgia vibe, with bowling, food, and drinks. This is the latest expansion of the social entertainment space approach to modern amusement venues. 

This concludes the coverage before we shift gears to cover the massive IAAPA’23 event. However, we can safely predict from the early information we have garnered, that IP and licensing will play a pivotal role in the new phase of adoption and growth across the attractions and amusement sector at the show. This could also be opening the door on a brand-new era of location-based licensed environments, that will drive the next phase of the industry.