#1174 – Active Time for XR Entertainment

Moving to the homeward stretch of the year, and we saw a culmination of major trade events mark the continuation of the June and July period. The ability to chart all these gatherings continues to be a hard task. Along with this, the Asian market sees China and Japan invest heavily in the next stage of entertainment developments, and news from the consumer VR scene shows a market in transition. 

Asia Trending

We complete the hard task to keep abreast of the leading trade events over this period. During the end of the month, the 38th CAAPA Attraction Expo (CAE) was held – organized by the China Association of Amusement Parks & Attractions (CAAPA) and held at the China International Exhibition Center, Beijing. The event saw a smattering of international visitors and exhibitors and marked the latest in several China-based attraction and amusement exhibitions in the territory, showing signs of returning to pre-COVID attendance figures. 

One of the biggest events taking place was ChinaJoy – celebrating its 20th anniversary and being one of the largest consumer digital entertainment expos and conferences (especially with the abandonment of holding E3). It was held in Shanghai’s New International Expo Center, split between some 200 business-to-consumer exhibitors, and another 300 business-to-business (developers) booths, along with the China Game Developers Conference. The importance of the Chinese player base was not lost on publishers, with demonstrations of new titles including the latest ‘Street Fighter 6’ and ‘Tekken 8’ (BANDAI NAMCO) releases. 

Focused on the consumer game scene, VR and immersive attractions were present mainly as promotional platforms to draw audiences. Such as on the vast Qualcomm booth, with the company promoting their latest ‘Snapdragon Pro Series’ processor, with a suite of eight Chinese VR motion sims running a promotional experience, and with riders using PICO 4 headsets. PICO also had a major booth presence at the show, demonstrating their VR/MR range. As did DPVR – these Chinese headset manufacturers are now setting their sights on Western deployment, looking at FCC certification to compete with the likes of Meta. 

Sony made a big splash at the Chinese show. Previously, consoles have found the territory to be a challenge due to governmental restrictions, but things have changed and the PlayStation booth was a major showing at the event. This included the promotion of the PSVR2 and new Asia-focused content such as ‘Crossfire: Sierra Squad’ for the VR peripheral. Sony was in celebratory mood, having announced some 40m sales of their PS5 console since release in 2020.   

Even AR was represented at the show, with a Chinese developer demonstrating e-karts equipped with AR viewers, allowing the players to collect virtual items as they drove around the stage. One additional element of the anniversary of the ChinaJoy event was the inclusion of a section of the vast exhibition floor promoting the development of AI-generated content, with an eye on the Chatbot revolution in search engine tools, created images and video. The show was used as a gathering point for game developers in the territory, with AI tools factored into the development process, offering cost-cutting and production streamlining opportunities. Meanwhile, tech talks discussed the impact of AI and Metaverse development.

One of the other aspects of ChinaJoy was its eSports component. The Chinese market is reported as having some 487m active eSports participants – indeed, the competitive videogame scene is now looking to grow across the sports scene. It was revealed that eSports will be taking place at the Asian Games in Hangzhou, with medal events, and several exhibitors were promoting their tournament and eSports team play. Overall, ChinaJoy saw a 338,000-attendance, moving back to pre-lockdown numbers, and paying witness to a growing China gaming scene.

New Entertainment Model

The continued diversification of the Japanese amusement sector was reflected in our coverage from Amusement & Leisure Expo (AMLEX), in June, but also across the scene during reports from this territory for some time. One of the biggest indicators has been the near suspension of major international amusement releases for a focus on facility business, and the new evolution of entertainment site deployment. Gone are the traditional game arcades and Pachinko parlours, and we see the entrance of the entertainment venue – such as with the growth of GENDA operations and new brand stores from TAITO, BANDAI NAMCO, and others. 

Regarding GENDA, the changing landscape of the Japanese amusement scene can be seen with the divide between the traditional amusement operations business and the new emerging sector. We received the full details on the story first broken with GENDA’s listing on the Tokyo Stock Exchange in August. The company operates some 250 facilities within Japan (under the GiGO brand) and has interests with the US with ‘Enterrium’ (previously ‘Pac-Man Entertainment’, in Chicago). Following the acquisition of the SEGA facility operation and BANDAI NAMCO US flagship entertainment site, the company has grown as an example of the new style of amusement venue operation. With a strong focus on the family and social dynamic, the GiGO brand stands for “get into the gaming oasis”. GENDA has also invested in new active entertainment elements, such as their ‘Little Planet’ children’s future active play concept.

BANDAI NAMCO Amusement division – following the news of their new ‘Bandai Namco Cross Store’ facility in London (soon to be reported from), we saw the Japanese parent announce the formation of a new division. The new operation will focus on the development and operation of sports entertainment facilities. Recently, we have seen the opening of ‘Tondemi’, an active entertainment brand in China during 2017, then by the ‘VS Park’ brand first opened in 2018, and now with the digital playground brand ‘Adventure Island Docodoco’. With the news of the new division, also came news of BNA’s plans to launch a new brand, ‘KOBE Super Stadium’, offering an active sports entertainment venue – planned to open in Spring 2024.

This news flows behind the announcement by CA SEGA (the China Animation Character Company partnership with the independent division SEGA Live Creation) to open the first of their ‘JOYPOLIS Sport’ brand active entertainment facilities. The brand comprises several physical activities, such as projection tracked football, tennis, and archery – also including a unique projection floor game called ‘DIDIM’, along with PC terminals for eSports, trampoline, and climbing walls. The venues even include SEGA DartsLive installations. This is all part of a sports-focused venue business which the corporation plans to roll out. Likewise, we have seen other Japanese amusement operators turn to this new entertainment model, such as with CAPCOM opening the ‘Crazy BANeT’ chain, described as an “active sports entertainment” venue. 

Not just seen in Japan, Europe has also seen the growth of active entertainment venues embracing the latest technology. In Belgium, Europe’s biggest self-styled “entertainment sports theme park” opened. Called ‘Sparkx’, the 3,500-sq.m. venue offers some 50 different sports physical activities, sitting alongside recreations using AR and VR technology as well as tracked projection and digital screens. Platforms like the ‘ParadropVR’ from Frontgrid have been installed, along with archery and racing simulators. This approach to physical entertainment is a concept building off the back of activity and trampoline centers, but now includes a more sophisticated level of gamification. Meanwhile, the Finish chain ‘SuperPark’ has opened its two latest venues in the Philippines, again offering several activity sporting style entertainments. All this underlines the growth of this trend.

Another element is the idea of offering pop-up active entertainment experiences linked with well-known IP, which has been gaining ground. In Japan, came the announcement, in July, of ‘Pokémon Colours Yokohama’ – based on the role playing Pokémon game, an experimental exhibition has been created, combining four distinctive interactive activities within one single exhibition. The activities combine interactive projection experiences and physical activities based in the Pokémon universe. The space includes merch and refreshments and is the latest Nintendo facility concept, in partnership with the Pokémon Company.

New Show Model

Following the impact of AMLEX’23 on the traditional Japanese amusement factory business, the local trade association has been working behind the scenes on its own plans to revitalize the flagging amusement sector. As revealed in our JAPEO’23 coverage from February, the Japan Amusement Industry Association (JAIA) (comprising the legacy trade associations as well as representing machine manufacturers, sales, and facility operators) had agreed to end its original February fixture for the JAEPO convention and move to a November window. In further developments, it was revealed that the new show would be called ‘Amusement Expo’. This was a surprising move, with no understanding of the international confusion this will cause, as the North American amusement trade holds its own ‘Amusement Expo’ event in March each year.

The Japanese Amusement Expo will be held at the Tokyo Big Site – an exhibition and convention centre in the capital – on the 25th of November 2023. It is described as the reimagined JAEPO event, comprising top notch amusement machines, games, and entertainment. Expected is a return to a dedicated day for trade, and a dedicated day for the public, along with competitions and live performances from exhibitor stages. Along with the confusing new name, it will clash with the US event – the JAIA event planned for November will come just eight days after the US IAAPA trade event, which will force some exhibitors to pick one or the other. 

Oblivious to the confusion caused, the exhibitor applications were made available from the beginning of August – as the JAIA rushes to prepare for an event that will need to secure the Japanese amusement association’s structure, as the scene is undergoing considerable pressure from changing conditions and the evaporation of control on developments in the entertainment landscape in Japan.   

Metaverse Woes Continue 

As previously covered, Meta (formally Facebook) has undertaken record layoffs in the corporation’s history, with more than 20,000 let go by the social media and technology giant. Claimed as one of the many suffering under the “Tech Apocalypse”, the ramifications of a failed business strategy during and after the Global Health Crisis, and the failure of the company’s aspirations to define the virtual reality boom, have come home to haunt the corporation.

In news from various sources (many of whom are previous staffers cut from the corporation), it was revealed first that, with the restructuring of the business, the plan for a global rollout of physical ‘Meta Stores’ has been drastically redacted – if not completely shelved. After opening their first store in May 2022 in California, grandiose plans for the brand had been revealed, which had incorporated a VR showroom to try out curated experiences on the Meta Quest range of headsets. At the time of launch, the concept was questioned as being a branded VR arcade that also sold Meta products, but soon revealed itself to be a badly conceived competitor to Apple and Microsoft stores. The first store has seen poor customer interest, even located on a Meta campus. Now this plan seems to have been abandoned, with only one store opened.

Regarding another victim of poor reaction and confused business planning, it was revealed by several media services that the ‘Meta Quest Pro’ headset, launched in October 2022, was to be discontinued (some called “end-of-life”). Rumors suggested that only 50,000 units had been sold of this MR/VR headset, aimed at enterprise and prosumer utilization. Sources close to the Chinese fabrication company stated that no further manufacturing of the system would be taking place, with Meta clearing remaining stocks – at which point the platform will be discontinued. The plans rumored for a ‘Quest Pro 2’ are also under review for possible shelving at this point. Attempts by Meta executives to place a positive spin on the situation could not cover up the reality that the ‘Quest Pro’ had proven unable to achieve any of the milestones set for it, and that public reaction, even after dropping the system’s exorbitant price, had failed to find support – both in sales and content creation. The discontinuation of the Pro will also place strains on the partnership with Microsoft, who had proposed to support the MR platform after discontinuing their own ‘Hololens’ platform.

Suffering both layoffs and restructuring, many industry observers wonder on the plight of the ambitious Metaverse strategy, as launched by the corporation’s founder, when the company changed its name to Meta in 2021. We have seen a failure to attract users to the Meta’s ‘Horizon Worlds’ social VR space, and internal reporting on an inability to achieve retention of VR customers on their hardware. The hoped for monthly active users of 500,000 had achieved only 200,000 by the end of 2022. It was revealed that an in-house studio has been funded to make first-party VR games for the space, to try and draw users as the space prepares to reboot and include a new mobile app. The corporation is hoping that its social space can compete with the likes of ‘Fortnite’ and ‘Roblox’ – the new platform is creating Meta Horizon interpretations of these popular experiences, exclusively for their space, looking to attract the younger audience (this follows the lessening of age restrictions on their platform).

All these expensive measures are placing pressure on the operation’s $100b strategy. All seems to rest on September’s ‘Meta Connect’ conference, where the full release plans of the ‘Quest 3’ standalone VR platform will be revealed, along with new game titles for the platform. The reception to the release of this ninth VR headset, since the corporation’s VR operation was acquired from Oculus VR in 2014, seems to hold the fate of the division in its hands. The importance of this event is seen with it reverting to a live stage gathering with (a limited) audience attendance and demonstrations, hoping to prove the Metaverse is coming to life. The event will still be livestreamed.

The reality of the situation, however, at Meta’s AR and VR division (Meta Reality Labs), established following the 2014 acquisition, was brought home following a report in CNBC that revealed the operation had lost an eye-watering $21b since the beginning of 2022. It was reported that $3.7b of this was operating loss. This comes as Meta announced new pricing for subscription to their VR content and the restructuring of the pricing of the VR headsets. Also, sources suggested that plans to launch a new AR glasses system have been put on indefinite hold, and that more layoffs from the Meta Reality Labs operation are expected to come after the launch of the next hardware in October (the ‘Meta Quest 3’).

Virtual Positioning

The need to secure control of the usage of hardware, within the commercial entertainment landscape, has never been stronger. In a sign of the value and opportunity of this sector, VR headset manufacturers will increase the restrictions and terms of usage to ensure they control deployment of their brands.

This was best illustrated from Valve – the game developer and operator of the Steam game digital distribution service, also known for their early work in defining and deploying VR. The company is behind the VR Room platform that ushered in development of this phase of VR – leading to the development of the HTC VIVE Pro headset series, their own Valve Index headset, and the popularity of SteamVR platform. Sources revealed that Valve had made changes to their terms of service (ToS) that now restricted the use of their Open Runtime code, blocking its usage or manipulation, so forcing certain VR amusement platforms to remove the code, or face censure. This seemed to block separate licenses, and the move complicated support for Valve – especially as they transfer more responsibility to HTC regarding support involvement with the VIVE and Lighthouse range. At least one VR amusement platform was known to be impacted by this development, and the manufacturers are evaluating their position. Once we have more information, we will share it.

Another VR manufacturer, the Meta Reality Labs division of the social media and technology giant, also made changes to their application programming interface (API). Meta, working with their development teams, updated their Platform Integrity Attestation API – allowing for what was claimed to ensure security of their headsets against piracy and external misuse, along with protecting financial and enterprise app data. This protection also included the closing of the door on the misuse of their technology and brand in applications not supported by the terms of usage. Meta has been known to not be as supportive as some regarding the application of VR arcades and LBE deployment of their technology – although the company was known to have supported the failed TheVOID free-roam VR experience. Several developers over the years have fallen foul of initially expecting Meta support in their VR arcade projects, only to be blocked from using the consumer hardware. And with the Meta Quest 2 and soon to be release, the Quest 3 headsets’ further commercial entertainment interest had been voiced (and demonstrated). However, current updates to the usage of the API and hardware are expected once again to firmly close this avenue to operators.

Talking about closing the door on opportunity, Meta was again the focus of ire from the VR community with the shuttering of the servers and closing of ‘Echo VR’ – the popular free-to-play multiplayer VR zero gravity game arena, launched in 2017. The game was one of the few multi-player success stories on the Quest platform, and it took many by surprise that Meta would shutter this particular game. In statements on social media, Meta CTO claimed the reasoning behind this move was that the game player-base had fallen into the low ten thousand and was not offering a return on investment to maintain the resources to run it. With the servers shut down at the beginning of August, a very vocal player-base (some who had even funded a plane to fly over Meta headquarters demanding a reprieve on the decision), vented their anger across social media. Sources suggested that Meta, who owns the games developer Ready at Dawn Studio, is working on a new game, borrowing from the original that will be siloed within ‘Horizon Worlds’ to salvage the failing VR space (these rumors have yet to be confirmed). 

Closing the door on the usage of Meta Quest hardware in VR arcades has been rumored to be linked to internal legal advice once proffered, that felt supporting independent operators would open the corporation up to claims of possible liability. It was never confirmed or refuted by Meta if this was the core reason for their blocking of enterprise entertainment usage. Meanwhile, others pointed to a need to wholly control their ecosystem. This suggestion was lent weight when it was announced, in 2022, that Meta would be entering the retail scene, with a chain of physical ‘Meta Store’ venues, as mentioned previously. The first store has a dedicated VR showroom, reminiscent of many VR arcades. Sadly, the lessons learned in the LBE industry of how to operate a successful VR arcade, were lost on the team behind the ‘Meta Store’ concept, and the project is reported as now being abandoned, just under nine months since opening. This awakes memories of the ignominious failure of the ‘IMAX VR Centre’ chain, in 2018 – and their association with the problematic StarVR platform.

Marking the anniversary of TheVOID and IMAX VR Centre high-profile collapses, and following a near blackout on reporting of the situation, this led to the ignominious closures of these highly invested projects – back in the early part of this current phase of VR adoption. The Stinger Report will be publishing a far-reaching feature on the timelines and key elements that led to the rise and ignominious fall of these LBE concepts, that had received incredible hype at the time but vanished overnight from the scene. Dispelling many of the myths engineered to deflect investigation or questioning – the coverage will reveal lessons all can learn from these failures.