Will movie theaters be the secret to VR’s success?

Virtual reality is coming to your movie theater lobby

Virtual Reality Los Angeles has been holding seasonal conventions to introduce people to VR for more than four years. Usually the shows have focused on evangelizing on behalf of the technology — touting its transformative potential in gaming, storytelling, and industrial applications. But this year’s VLRA Summer Expo found itself addressing an industry that has transitioned from theoretical to actual, with retail versions of the Oculus Rift and HTC Vive landing in living rooms, and Sony’s PlayStation VR waiting just around the corner. Virtual reality isn’t just a futuristic concept anymore, but an actual market. And so the speakers at VRLA shifted their focus from niche technology tastemakers, to the endless buying potential of mainstream consumers.

"VR is now, but it always doesn't feel like right now," acknowledged Roy Taylor, AMD’s corporate vice president of alliances, during the show’s opening keynote last Friday. "But I'm going to talk to you today about bringing VR into a place where it's truly an industry. A trillion-dollar industry."

A huge part of that conversation continues to be the chicken-or-the-egg question of content. How can a new medium achieve widespread consumer adoption without a rich selection of experiences, and why should content creators invest money in building those experiences without a sizable user base or proven way to make money?

At VRLA, one possible solution stood out: movie theaters.

CAN THE VR INDUSTRY PIGGYBACK ON TOP OF MOVIES AND MALLS?

More specifically, movie theater lobbies, or any other space like a mall or museum that could be a friendly home to a walk-by VR station. The catch phrase is location-based VR, and while that’s largely been used to describe VR arcades or theme-park-style installations, Taylor took the show as an opportunity to introduce another option in the form of a pod called the VenueVR Gateway. Made by Awesome Rocketship, the concept is simple: a station with a motorized platform, haptic feedback, and integrated computer that can be used to power high-end VR gaming, with various configurations allowing sit-down, stand-up, or full room-scale experiences. The hope is that by offering an easy way to deploy pay-per-play VR stations, the industry can piggyback on top of movie theaters and other venues to create a profitable market for virtual reality developers nearly overnight.

"We wanted to start a VR content studio," Awesome Rocketship CEO Jim Stewartson tells The Verge. "I ran the numbers and I just saw no way at all that we were going to make money." Instead, he and his partners decided to tackle the monetization and market size problems, pivoting into making standalone stations. The computer hardware and head-mounted displays are handled by partners (AMD is providing the GPUs, and Stewartson says deals with headset manufacturers are forthcoming), and revenue is then split between Awesome Rocketship, the venue, and the developer of the game that was played. "We're not trying in any way to compete with other hardware makers," he said. "We're a distribution company. Building the units and creating that environment is a means to an end."

Awesome Rocketship plans to reach test markets by this October, with wider deployment planned by the end of the year. Walking around the VRLA show floor, it was easy to see how the idea could catch on, even at the tentative $1-per-minute price point. Imagine a group of friends that go to a theater to see Star Trek Beyond, walk out afterward, and then all sit down at a four-pod cluster to tackle their own mission with Star Trek: Bridge Crew.

GO SEE STAR TREK BEYOND, THEN HIT THE LOBBY TO PLAY A VR MISSION WITH BRIDGE CREW

But Awesome Rocketship isn’t the only one trying to merge VR with movie theaters. Earlier this year, IMAX announced that it would be rolling out VR stations in US movie theaters by the end of 2016 as well, aiming to provide an experience with a high-end headset that will go beyond what people will be able to achieve at home. And abroad, HTC has been making inroads bysigning deals with internet cafes in China, a market that Stewartson said his company has also found to be particularly responsive.

For the VR industry itself, the stakes are huge. During his keynote, AMD’s Roy Taylor ran through a few location-based rollout scenarios that, while seemingly a tad optimistic, spelled out the potential upside. If 100 movie theaters installed six stations each, and could push through 50 users a day on each, a $10 experience would bring in over $100 million in revenue, Taylor said. Scale that to 3,600 pods, and you’d be looking at over $600 million.

The problem is that there’s no way of knowing yet what consumer interest will truly be, particularly when movie tickets are already reaching all-time highs. And while a lot of the conversation about virtual reality has focused on the possibilities in gaming and storytelling, in many cases entertainment has been one of the least profitable areas to focus on.

INTRODUCING CONSUMERS TO THE BEST VR HEADSETS AND CONTROLLERS IS VITAL

"This is a very enthusiasm-driven exhibition, so here people are more into the entertainment aspect," says Alex Stein, creative director for Deluxe VR, the virtual reality division of the Hollywood post-production powerhouse. "When the question comes to where is the money, then at the moment I would say it's more on the [business to business] side, especially for the room scale experiences." That’s a fact largely tied to what people already have in their homes, Stein says; the majority of consumer-owned "headsets" are of the Google Cardboard and Gear VR variety, so that’s the target most entertainment companies are worried about hitting. Corporate customers using VR internally simply don’t have that same concern.

But that dynamic is exactly why Taylor sees a turnkey solution like Awesome Rocketship’s as so vital. Not only could it potentially incentivize developers to build AAA titles that take advantage of the best modern VR has to offer, but it also provides one more way in which customers can introduce themselves to the full potential of modern headsets and controllers — encounters that could lead to more sales to home users.

Of course, that same first-encounter principle could also work against the industry if a customer tries a VR pod with a system that’s not tracking right, or whose frame rate isn’t up to snuff (or if it offers something like the nausea-inducing Resident Evil 7 we saw at E3). And there’s also something inherently reductive about taking a medium with the vast potential of virtual reality, and turning it into something you just mess around with for a couple of minutes while waiting for a movie to start. Some of the most fascinating uses of VR can be painting programs, odd art games, or content creation tools that likely wouldn’t be the first thing somebody would pick if they’re looking for a quick gaming fix.

VR'S POTENTIAL REACHES FAR BEYOND KILLING TIME BEFORE A MOVIE STARTS

The conundrum is symptomatic of an industry that is slowly sorting itself out as it makes the transition from a fantastic emerging technology and into an actual business. In a way, that transformation lines up precisely with the state of a show like VRLA itself: an exposition that is covering a market that has finally become known to mainstream consumers, but which nevertheless is still in its infancy.

"When we first started doing this show, practically no one knew about VR and why you should care about it," says VRLA founder Cosmo Scharf. "Now we've moved into this period where enough people know about it and are making awesome things for it, and starting to improve upon the quality of the demos ... It will only continue to improve, and that's what's exciting. Because it's already cool right now, but it still has a way to go."