Operators Open Up About VR Profits and Expansion

This week, there’s big news from the two most significant players in the free-roam VR business. Sandbox VR and Zero Latency are pushing out innovations, and at least two of their more successful operators have announced aggressive expansion plans.

Ronan Cunningham, who brought Zero Latency to Ireland, was recently featured in a story about their expansion plans and profitability. Having survived the pandemic shutdown and learning to navigate the early days of marketing and running a VR arcade, it seems they’ve hit their stride and are ready to expand rapidly.

Andy Scanlon is the CEO of the Sandbox VR UK licensee. He’s wrapping up a successful crowdfunding campaign, having raised over $500K to help fund their third location. They intend to open 30 sites by 2031. You can access their investor deck by signing up here or by replying to this newsletter with Sandbox in the subject.

I’ve been in the LBE business for almost 40 years. I have seen many companies expand before nailing the single-unit economics. VR arcades are not a SaaS business; you cannot scale to profitability. If anything, the more locations you open, the harder it is to make them profitable. So, if your first sites don’t rain cash, you’d better sit tight and optimize until you nail the business model.

Both Ronan and Andy seem to have done so and are ready to accelerate. It takes time to learn how to effectively market VR to various customer segments, from families to millennials to corporate groups. Customer acquisition is critical, and both companies seem to have figured it out.

This is great news for the industry. I’ve been calling out VR arcades as marginal businesses for years. But the combination of rapidly declining CAPEX, increasing consumer awareness, real estate developers doing deals, and a seemingly infinite appetite for immersive entertainment seems like the VR arcade business is set to explode—in a good way.

To help you learn more about this emerging opportunity, I am holding a one-day summit on August 6th in Dallas. We will dive into the economics of these software-driven Downloadable Entertainment Centers and offer never-before-seen demos of the latest experiences from around the world in a one-of-a-kind 20K foot prototype center. For more info or to grab a ticket before it sells out, click this link.

And check out the news below featuring a new IP-based game coming from Zero Latency in October and a new consumer promo from Sandbox VR starring a Hollywood legend.