Why Arcades Pick VRilliant (And Players Come Back)
VRilliant is a leading name in the world of VR arcade games. They are recognized as one of the world’s…
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extra! the newsletter for operators and immersive venue owners -
extra! the newsletter for operators and immersive venue owners -
One game, 70 venues, and a laser-like focus on esports made them one of the most successful VR companies on the planet. How did they do it? Find out after the short LEXRA Summit announcement.
It’s official. The VR Arcade and Attraction Summit is growing up — it’s now the LEXRA Summit — and it’s coming to Austin, TX, Aug 3–5. Read the official announcement here.
EVA, or Esports Virtual Arenas, just closed a €35 million investment round from a private equity firm to expand from its current 70-location footprint further into Europe, with an expectation of 200 or more venues within a few years. EVA’s business model has come under repeated questioning from people, including me. It’s hard to understand how they run a profitable business when only 10 players can play at a time in a 5,000 sq ft space, paying only €20 a game.
But I know private equity, and I know there’s no way in hell they’d have raised $35 million if their core business didn’t work. It just goes to show you that you should always question your assumptions.
The clue comes in the repeat play, which is tied to the price. I spent a few years chasing the intersection of esports and location-based VR, but I gave up. I’ve always kept an eye on EVA. When I first interviewed Jean at the VR Days conference in Amsterdam back in 2017, he was just starting his journey. I encouraged him to stay focused on esports because I knew the only way to be successful was to commit to it and stick with it over time.
Next week, we will launch our LEXPERTS program. As I’ve gotten to know some of our members, it’s become apparent that we have people in our community who are among the world’s leading experts in various fields. Like game design, storytelling, entrepreneurship, raising money, real estate, and all the stuff you need to do to be successful in business.
Esports isn’t just about a game. It’s about building community, and that takes patience and consistent effort. I’m learning that through LEXRA myself right now. With that consistent applied effort, you see results.
One of the inherent challenges with esports and VR is the price point. For something to become an esport, you have to be able to practice it to build skill. VR tends to be expensive, priced at a dollar or more a minute, which really limits its audience. EVA has held the line on that. Jean told me they’re charging 20 euros for 40 minutes of gameplay, and it’s even cheaper with a monthly subscription, dropping to as little as ten or eleven euros per session.
Raising $35 million is hard in any environment, especially for a location-based VR company focused on esports. In the current investment climate, to be able to close a round like that is nothing short of a miracle, or a signal that their business is really working — or both.
I can’t count the number of VR companies that have shuttered their doors this year. Just in France alone, there are at least a few. If you expand it to consumer companies, there’s even more. It just goes to show you that solid business economics trump environmental conditions every single time.
Jean told me that they’ve been profitable for three consecutive years. Private equity deal mechanics require extensive due diligence. There was an army of people who spent three months looking at every single metric in their business. The entire fundraising journey took him a year, including 6 months from when they started pitching to when they closed the round.
During my next AMA, I’ll be talking about raising money. No, I’m not going to tell you how to raise €35 million, but I have raised over $100 million of investment capital in my career, so I do know a thing or two. Ask me anything. They are always free. You don’t have to be a paying LEXRA member to join.
I’ve always known that one great game can make a company. Don’t believe me? Ever heard of Pac-Man or Tetris, or Time Crisis? Amazing games pass the test of time. There just aren’t that many of them in VR. So, as an industry, we tend to make it up with volume.
The first question an operator will ask a supplier is, “Do you have a great game? Will people play it over and over again?” EVA seems to have cracked that nut. 70% of their players play their esport game. I’ve played it. It’s like playing Call of Duty in real life. It’s the best competitive VR experience I’ve ever had. And I never wanted to stop.
I asked Jean about retention. They are laser-focused on it. Jean told me that depth over breadth is what drives retention. 65% of their new players come as guests of previous players, and then they convert to monthly subscribers. EVA has done this by copying what’s called a retention loop. Fortnite has mastered it. They have content seasons, and they program the game with reasons to come back. When you play next month, the experience will be different from this month — not just because you’re playing against other people, but because they’re live-programming the game for retention.
So instead of investing their development team’s resources in coming up with new game concepts, they focus on continually evolving the game they already have, and it’s clearly working.
Jean and his team realized that the Call of Duty-style play would only appeal to a certain psychographic and demographic of players. He told me that on Wednesdays there’s no school in France, and their business drops when family entertainment centers are booming, so they’re working on adding different content that stays within the brand but attracts a more family audience.
On May 20th, they’ll announce a new game with a massive IP that anyone in the amusement industry will recognize. It’s still a player-versus-player competitive game, but it uses a different gameplay mechanic and a family-friendly IP to make it more fun.
I just spent some time at Another World in Kuala Lumpur, Malaysia, and they’ve done something similar. They have a game called Kernel — a photorealistic, adult-themed player-versus-player game — and a more Fortnite-like, cartoon-style PvP game called Schmooter. Same game mechanics, different art styles, different audiences.
But more interestingly, they have been testing EVA Karting GP using real electric drift karts for eight to ten drivers wearing VR helmets. I got to give it to them. They don’t seem to ever take the easy path. Several companies have tried this and failed. Spree Interactive and VR Coaster tried it with bumper cars but never landed on a product that could scale. There’s also a small FEC chain in Belgium that’s been running some home-baked versions of this, but multiple people I know have gone there to try it, and it’s always out of order.
If you’re going to put VR headsets on people and not use mixed reality but true virtual reality, your tracking and anti-collision software has to be perfect. EVA has developed an anti-collision system using external Azure positioning software, so if the VR goes down, the car still won’t collide.
Jean admitted there are going to be some licensing challenges, but if they pull this off, it’s going to build a real moat around their business. Not that esports isn’t already a moat. Because anybody with a couple of million bucks can build a go-kart track, we’re seeing them pop up everywhere around the world now. But building Mario Kart in real life? That’s a defensible business strategy. [Editor’s note: There is no mention of any kind of Mario or Nintendo license associated with this product. It’s just the inspiration. After all, who hasn’t wanted to play Mario Kart in real life?]
Jean always dreamed of EVA becoming a professional esport. To be honest, I thought he was dreaming. So here’s to the dreamers, because eight top esports organizations have now created EVA teams, including G2, Vitality, Gigantics, Heretics, and OG. Each team is based in a different city and plays each other live over the internet. That’s right — EVA locations are connected for head-to-head live virtual play, which is streamed on Twitch to a global audience.
G2 Esports Team is the organization’s first mixed gender roster.
Pro teams vie for cash prizes, but they also get revenue share from exclusive digital goods that casual players can buy and use as in-game skins. The Skin store is relatively new, launching only six months ago, but it’s already generated $400,000 in revenue this year.
There’s a model from Matt Church about levels of commitment. The lowest form of commitment is money. Next is time, then comes energy. The top level of commitment is identity: spending money on a skin so your weapon and avatar show up branded with your favorite esports organization. That is the definition of commitment, and it’s why EVA is successful. They have committed players spending real money to play over and over again.
EVA is going to use the capital to immediately expand beyond their French borders into Germany, where they’re having some early success, Spain, and other Western European countries. They did some early expansion in the Middle East, but Jean thinks they were too early. Same with their US expansion. Different cultures require a different level of support, and Jean said, “Maybe it was too early for us. We didn’t have the cash to support those types of locations properly.”
He’s also learned what type of operators are most successful. Running EVA requires a hands-on, dedicated commitment. If you start thinking about opening multiple locations before your first one is totally dialed in and profitable (and you know why it’s profitable), you’re not going to make it. That’s good advice for every operator running any kind of location-based entertainment business.
Jean would like to return to the U.S., but not until 2027. When they return, they want to do it with a company-run flagship to prove that it works and to learn how to make it work.
When you get to 70 locations, you have a ton of data. Making sense of that data can be extremely difficult, but AI is making it almost too easy, almost overnight. Part of the use of proceeds from this investment round is to leverage AI and all the data that EVA has to drive more frequent play and to optimize location performance. EVA’s investor, Raise Invest, brings that data and financial engineering expertise to the party, so it’s not just the money they raised — they got a strategic partner to help them grow the business.
There’s a clue here for every single arcade owner. I’ve been working with Reva Enzminger, founder and owner of Zoocade and VieVR in Austin, Texas. Her venues will be hosting the LEXRA Summit this August. She’s been using Claude Code to build all kinds of insight maps to drive her content and daypart decision-making. It’s become a superpower.
If you want to understand how to start using AI in a way that keeps humans in control, join us next week at the Huddle when Brent Bushnell welcomes Stephanie Riggs. She’s one of the world’s leading experiential designers, with two bestselling books to her name. And she’s also building one of the first AI native operating systems, Pearl.
Huddles are exclusive to paid LEXRA members. We are approaching 100 member companies. Members save 40% on Summit tickets, get exclusive access to coaching programs, and all kinds of amazing events. What are you waiting for?
Stay immersed,
Bob
