The VIVE Focus 3 VR headset is set to become the new standard for location-based VR, and it’s going to be a game-changer for operators. It’s lighter and more reliable than the original VIVE and VIVE Pro, the two most common arcade headsets. It has fewer parts to break and the sizing dial looks way more reliable. And its ability to reliably stream content over Wi-Fi 6E means no more backpacks and cables.

Focus 3 and VIVE’s LBSS will make free-roam VR more accessible. And with solution providers all selling the same hardware, I expect the pricing of turnkey hardware solutions will continue to plummet. It was only five years ago that Zero Latency was selling its custom arena-scale VR system for almost $700,000.
Now the core tech of their Gen 3 system based on Focus 3 probably doesn’t cost over 10% of that.

With HTC delivering most of the hardware solutions, the value exchange between suppliers and operators will shift more toward content. This will have a massive impact on the supplier, distributor, and operator ecosystem. The best way to explain how this might play out is to analyze the TV streaming networks.

Cable TV used to rule the world. To deliver content, “networks” like HBO delivered “shows” like Game of Thrones via devices called set-top boxes controlled by “cable providers” like Comcast. The internet and smart televisions broke down that system.

Now, networks deliver their shows through their own apps. These apps are available on various devices like phones, tablets, smart TVs, and devices like Fire Stick or Roku. Each device has its own interface or launcher.

I travel with an Amazon Fire Stick 4K. Wherever I am, I plug it into the TV. I subscribe to Apple TV+, HBO Max, Amazon Prime, Hulu, Disney+, and Paramount. There are a couple of shows on each network I love. The Fire Stick interface is the launcher from which I select the app that carries the show.

THIS IS HOW I SEE THE VR LANDSCAPE DEVELOPING

Springboard VR and Synthesis offer the launchers.
Game developers will become the studios that offer the apps.
Games are the shows in those apps.

In this scenario, HTC becomes like the TV manufacturer, building the devices we experience the content on. The whole value chain becomes abstracted. Why will this new model work for operators?

When an operator spends $100K on a VR solution, they’re betting that the solution provider will continue to develop the best content. But if someone comes out with a great game they want, the switching cost is prohibitively high because they would need to replace the hardware.

But what happens when all the hardware is the same? Operators can choose the best games for their customers, and the switching cost is nil.

Imagine a Spree Interactive Network, with the best games for kids and families.

A Hologate Network with the best studio-based IP like Ghostbusters.

And the Springboard Network with hit games like Arizona Sunshine and After the Fall.

This new model could prove challenging to developers who have relied on hardware margin. But it will enable game developers to focus on what they do best…create games. And it will enable operators to spend less on hardware, freeing up capital to invest in software.

Operators need to become more comfortable with content subscription models. We now live in a subscription economy. I probably have close to 100 subscriptions in my business. For decades we joked that arcade operators were in the furniture business, because we moved wooden cabinets around. Now operators are in the technology business.

The whole game is changing.