Location-Based VR Remains a Highlight in the Industry, but IMAX Shows It Is Still Early Days

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By Michael Inouye | 1Q 2019 | IN-5363

IMAX had high hopes for VR being a big draw, but foot traffic at IMAX’s VR arcades failed to meet expectations. This does not mean VR is a doomed technology, however, but resetting expectations and identifying valuable immersion scenarios versus gimmicks will be good areas on which to focus for the future.

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IMAX Shuts Down Its VR Arcades


IMAX was viewed as an early trailblazer within the VR marketplace—a veteran within the video industry, building a bridge between pre-existing and new technologies. IMAX has always been about immersive experiences, so Virtual Reality (VR) seemed like a natural evolution for the company, but after all the fanfare, the company decided to pull the plug on the remaining three locations (Bangkok, Los Angeles, and Toronto) early this year (1Q 2019). The year 2018 was certainly a challenging one for VR, between a rather dramatic shift in industry sentiment felt at big shows like the Consumer Electronics Show (CES) and the National Association of Broadcasters (NAB), and a mobile segment that saw remarkably little support. Yet, location-based VR was cited by many operating in and near the VR space as a shining beacon of optimism (tethered VR also had a decent 2018). Yes, China remains a challenging market (after too much growth), but arcades in many regions continue to expand and grow, so why did IMAX pull the plug?

Longevity and Content Still Lacking


Foot traffic through IMAX’s VR arcades failed to meet expectations, which was a significant factor in deciding to put the company’s VR aspirations on hold, and ultimately, shutting it down. As revelatory as a VR experience can be for some, the content libraries and experiences remain limited and IMAX offered more experiences than some of the other larger players in the VR arcade space, so this remains a key hurdle. Sessions are typically priced at a premium if you assign a dollar figure per minute (e.g., ~US$1 to US$2 per minute), so these locations need to offer more than the novelty of VR. While consumers’ perceptions of IMAX might align well with VR, the technology itself is not a motivating factor for many individuals to visit a location (at least not yet) and it did not do enough to change the overall foot-traffic going to IMAX locations. VR, in many cases, is supplementary to a business’ core activities, rather than a segment that can stand on its own.

Dave & Buster’s, for example, has pushed VR to its locations, but it is merely a complement to its preexisting establishments. Other arcades, bars, and assorted locations that have enlisted VR have similar expectations; VR, in many cases, is still value-additive and not a “game-changer.” Cases where VR locations have fared better typically offer a more engrossing experience with more room to move and interact than IMAX’s pods offered (e.g., Zero Latency, THE VOID, etc.). The balance between deeper immersion and traffic is a challenging task in these early days, and IMAX elected to go for volume that simply did not materialize (at least not within its expected timeframe). StarVR, which supplied some of the Head-Mounted Displays (HMDs) to IMAX, also ran into problems (parent Starbreeze has both financial and legal issues) and put its developer program on hold; however, this action likely had little bearing on IMAX’s ultimate decision to cease its VR operations.

Focus on Immersion, Rather than the Tech Itself


VR as a technology can offer deeply immersive and novel experiences, but it is not the often quoted “field of dreams” offering an “if you build it, they will come” type of beacon. For some, more education/information is needed about VR and for others it is merely a cool technology, but not something that they need or demand as a recurring element of their daily lives, so we are still leagues away from Extended Reality (XR) becoming the next compute platform and replacing devices like smartphones. Still, this is still early days, and early stages for these technologies, so it is particularly important to establish reasonable expectations and to focus on areas where immersion creates enough value that VR starts to become a valuable tool, rather than a gimmick or overly reliant on the “cool factor.”

ABI Research will discuss our coverage of CES 2019 in a future update, but we are already seeing more focus on deeper levels of immersion and evolving the technology and identifying what it can offer (and addressing the how and why VR is a value-add), rather than trying to ride on the coattails of VR/Augmented Reality (AR)/Mixed Reality (MR)/XR as good enough. All of these are necessary and appropriate steps for the market to continue moving forward—not the leaps and bounds that seemed possible a few years ago, but still forward looking.


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