Virtual Reality and Monetization Strategies

For the past two years, virtual reality (VR) providers and creators have been implementing tools and content to prompt consumers to purchase dedicated headsets and live new-format immersive experiences. Will the adoption of this technology be spurred by low prices or monetization strategies that are similar to those developed for traditional screen content?

VR pioneers basically originate from the television, cinema and video game industries. It was therefore foreseeable that the first business models susceptible of giving weight to the nascent VR industry are essentially inspired from these highly typed markets.

Three trends are already observable depending on the use or functionality of this immersive format: fully independent content, content derived from a traditional franchise and multi-user content requiring the use of a collective space.

OVERVIEW OF THE ONLINE VR OFFER

Oculus, which has sold 1 million Rift and Gear VR headsets, operates an immersive application store that offers 250 experiences of different types and variable durations.

The Steam online entertainment application store, which caters to more than 130 million subscribers, proposes VR content for Rift and HTC Vive systems. Applications can be selected in several categories (sitting games, standing games, games requiring various room sizes). Several free trial demonstrations are also available.

Online since the beginning of 2014, WEARVR claims to be the largest independent online VR content store with a repertoire of more than 1,000 titles. The portal will shortly be launching Bogglebox, a secure platform that boasts a selection of VR content designed for children.

The Google Play store promotes applications developed for the Cardboard glasses whereas Apple does the same with its iTunes store, proposing immersive content applications that are compatible with iOS or Android.

These applications are available free of charge or priced from $0.99 for casual games to $32.99 for Job Simulator, a satirical game designed for HTC Vive systems and selected at Sundance New Frontier this year.

JOB SIMULATOR

Participant in a panel on immersive content business models at Cannes’ NEXT last May, VRWERX’s Alex Barder claims that whatever is free hinders the opportunity to develop VR into a profitable industry that attracts investors. “The game industry has developed relationships and extensive knowledge on its clients. This enables it to generate regular sales flows by offering additional game levels, contrary to cinema, which only delves in unitary,” states Barder. “If VR content is engaging, people will come and adopt it regardless of duration. In the medium term, each studio will operate its own immersive application store.”

Others, like British Adam May of Vision3, claim to the contrary: free time-limited immersive application launches should contribute to generating public interest for VR.

IS VR THE ULTIMATE FORM OF DERIVED CONTENT?

THE WALK VR EXPERIENCE

The major Hollywood studios and operating conglomerates are currently exploring possibilities to enhance the movie-theatre cinema experience by proposing short in situ and paid VR experiences based on the themes covered by the advertised films.

Thus, Sony installed immersive adventure stations in movie theatres featuring The Walk and Goosebumps. For $20, people could immerse into a high-resolution rendition of these movie universes. These immersive experiences thereby add value to studios’ multiplatform strategies by at once promoting the film’s release and the subsequent release of an immersive game for Sony’s PlayStation VR systems.

Paranormal Activity, one of the first franchises to have successfully operated VR in fifteen or so multiplexes of the AMC chain last year, will be releasing this summer Paranormal Activity: The Lost Soul, the first chapter of this saga comprised of six films produced exclusively for VR and proposing ten or so previously unreleased hours on Vive, Rift and Sony PlayStation VR.

In turn, the IMAX corporation announced its intent to open six VR theatres in American and Chinese shopping centres and multiplexes before the end of the year. These theatres use headsets developed by Starbreeze, a Swiss company, to provide an wider immersive field of vision (210 degrees compared to 110 degrees for the Rift and Vive headsets). The goal is to propose experiences that are even more convincing than those proposed for residential use, of a duration of 10 minutes and for a price ranging between $7 and $10.

VR ALONE OR WITH OTHERS?

The technology does not yet enable the production of efficient multiuser VR experiences, but a host of initiatives have been introduced in the past few months in Europe and Asia to transpose the immersive experience to a cinematographic broadcast environment.

In Amsterdam and Berlin, young entrepreneur Jip Samhoud implemented what he qualifies as the very first virtual reality movie theatres in the world. These 50-headset/seat theatres are off to a rather good start, having been visited by 25,000 people in three months (eight 35-minute sessions per day five days a week). Just like cinema exhibition, the economic model behind The VR Cinema rests on ticket sales (€12.50 per ticket) and food stand revenues. Samhoud’s ambition is to export this concept combining mass communion and thematic curation to theatres in Madrid, Paris and London in the coming months.

In France, pickupVRcinema proposes five thematic programs (Frisson, État du monde, Voyage, French Touch, Grand spectacle) comprising between three and five films totalling 40 minutes, “the best VR creation in the world, most of the time exclusively for France.” Viewers individually reserve their seats in advance.

The expertise demonstrated by pickupVRcinema, which was recently drawn upon at Cannes NEXT and the Paris Virtual Film Festival, is closely monitored by the Centre National du Cinéma et de l’Image Animée (CNC), which is attentive to the “possibilities in terms of exhibition, which was not the case with transmedia” as well as to “the collective, social and human aspects of these VR experiences [providing] movie theatre operators with an opportunity to diversify.” Pauline Augrain, in charge of digital works for the CNC, goes so far as to state that certain exhibition and digital distribution projects could eventually receive distribution and exhibition assistance.

In Asia, namely in China, Japan and South Korea, the VR Arcade phenomenon (the contemporary version of the 1990s’ Internet cafés) is experiencing explosive growth. These environments provide youth and users who do not have the financial means to purchase a VR headset and gaming accessories with a venue to live immersive experiences at a low cost in the company of other fans.

For example, the new VR arcade that Bandai Namco will be opening in Tokyo will be reserved for people aged 13 years and up and sessions will cost between $6 and $9 each.

HTC is one of the most active players in this market. It recently entered into a partnership with ShunWang Technology, China’s most important provider of arcade game software, to provide one hundred million players with access to Vive stations and convert many former movie theatres into e-sports arenas that propose immersive experiences.

Whether experienced alone or with other users, through online stores or thematic facilities in locations of significant affluence, virtual reality knows no frontiers and will soon be proposed in amusement parks, casinos, museums and shopping centres among others. Rights holders’ ability to define the operating and monetization model in terms of the format and context in which VR content is used will be instrumental in converting new consumers to the technology.

Posted in: Business Practices

Tags: cannes next, distribution, monetization, transmedia, trends, vr



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