Can VR Theme Parks Save China's VR Market?

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Can VR Theme Parks Save China's VR Market?
May 21, 2018
Employees wearing virtual reality headsets and using electronic rifles participate in a demonstration at the SoReal virtual reality park in Beijing, China .Gilles Sabrie/Bloomberg via Getty Images

 

After the giddy days of 2014, when Facebook acquired Oculus VR for $2 billion and we were all on the brink of a glorious, virtual future, all has gone quiet. Despite a tedious wave of hype, VR has been slow to go mainstream.

 

“The market is still quite niche at the moment,” says George Jijiashvili, a VR analyst at CC Insight. While around 51 million headsets are thought to be in use, the industry is only expected to shift 4.6 million dedicated VR devices this year. In a market dominated by low-end VR enabled phones, Oculus Rift and the HTC Vive continue to struggle.

 

But in China, things are different. The recent opening of the giant Oriental Science Fiction Valley theme park in Guizhou, China – replete with a gigantic, cyberpunk Transformers-style statue – adds to a total of 380 reportedly in operation around the world. In Asia, the virtual reality experience industry is booming.

 

“Instead of buying one for the household, what a lot of consumers seem to prefer is going to a destination or location and experiencing it there,” says Joost Van Dreunen, CEO of Superdata Research. VR Zone Shinjuku, Japan’s largest VR entertainment centre, and VR Park Dubai, due to open later this year, are but two examples of a much wider trend.

 

The main barriers to entry for VR adoption have been the high cost of headsets and the technical knowledge required to get everything working properly. Why spend a small fortune when you can head to your local VR arcade and get a far better experience? “There’s this intermediary where you have these theme parks and physical locations where you can go and experience set-up VR, ready to go VR, and that seems to be growing in popularity, especially in Asia.” Experiences in theme parks, which have budget to invest in the best kit, will also be more immersive.

 

“The VR industry is still young, so it’s important we cut it some slack and not over inflate forecasts,” says Stephanie Llamas, a VR specialist at Superdata. At least now, she argues, the industry is finally on the right track after a difficult start.

 

The involvement of major tech firms like Google and Facebook, Llamas adds, will mean that costs go down, and “awareness rises and content offerings become more diverse”. The next major milestone in terms of bringing down practical barriers to entry, after cost, will be more standalone devices. “Untethering devices is the biggest opportunity for widening adoption,” she says.

The same story doesn’t hold in China, however, where Facebook and Google have little impact. According to Jijiashvili, the country is “a bit of a wild west,” with no dominant players other than the HTC Vive around. Llamas agrees: “China is flooded with low-price devices by local manufacturers, so outside entrants have a hard time competing with local companies distribution and pricing. But the quality of those devices is still low, keeping China in the ‘cardboard’ stage,” with poorer quality content as a result.

 

It remains to be seen whether VR arcades will be the industry’s silver bullet. “The promise of arcades fell short last year,” says Llamas, “but we are currently seeing a resurgence of location-based experiences that may bring new opportunities to get people into truly immersive headsets.” And China is at the centre of this surge.

 

And issues remain. One major stumbling block is switching-up the experience to attract return visitors. “People don’t just want to have the same experience over and over again and the same exact one as everybody else,” Van Dreunen says. The tentative success of theme parks speaks to the fact that people don’t want to have the same VR experience day after day – returnability rests on it being different each time, using AI to be personal to the viewer, and remain high in quality.

 

“VR in theme parks offers them a great value proposition and can help push forward awareness. However, VR-only theme parks have some big hurdles to overcome,” Llamas says. “The biggest are [data] throughput and cost. It's hard to charge a premium for a short experience. Plus, getting a profitable amount of people through is difficult with the time it takes to get people suited up and guided through the experience. If those challenges can be overcome with easy pop-up solutions or allowing a large number of people to move through an experience at the same time, this could be a valuable business.”

 

So what role does VR have in a wider entertainment future? “If you look at Spotify, their big, key selling point is that you can make custom playlists. Those are the things that keep you on the platform,” says Van Dreunen. VR – a highly individual experience, unlike AR which is geared towards collaboration, will have to work out how to do customisation quickly.

 

“You want something that speaks directly to you,” says Van Dreunen. “And I think that that’s where VR could play an instrumental role – not just offering customised and direct entertainment, but doing it in such a way that it feels like the only experience available for you.”

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