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I get asked all the time what happened to The VOID. The narrative created by their management team was that the combination of the pandemic and the hefty license fees associated with their Disney-owned content crushed them. I’ve spoken to many people who worked at The VOID, from store management to some of their founders, trying to get to the truth.
What The VOID created was genuinely revolutionary. The experience of walking in a virtual world where the physical objects were mapped into the virtual space took people’s breath away. But just because you create a fantastic experience doesn’t mean you have a viable business. Ultimately The VOID’s company suffered from complexity. As best as I can find, there were at least seven components of their failure.
At the VRLA 2018 conference, VOID CEO Cliff Plumer stood on stage and bragged that at their Westfield London location, 70% of their customers had never been to the mall before. The VOID was going into high-profile, high-traffic areas paying premium rents, like Downtown Disney and the Oculus at the World Trade Center in Manhattan. Some of this was likely driven by strategic investments by Westfield Properties Group and Disney, who had conflicting strategic motives. But as a low-volume attraction, they weren’t drawing in sufficient numbers of customers to justify anchor tenant rental rates. Paying kiosk rent as a destination tenant is a recipe for failure in retail.
Most of The VOID’s content was based on blockbuster movies. Ghostbusters, Star Wars, Jumanji, and The Avengers came with high upfront guarantees and significant royalties. The Disney-licensed content was developed at Industrial Light and Magic, a division of Lucas Film, renowned as one of the most expensive development studios. The combination of high development costs amortized over a few locations, plus high royalties left them with a small contribution margin. Running a business on thin margins requires high operational excellence, labor cost efficiencies, and lower rent (see number 1) and leaves little room for error.
Every time I went to one of their locations, the number of staff was astounding. Some of this was due to the complexity of the equipment, which often failed, leading to backlogs of frustrated customers. But interviews with employees later revealed a lack of bottom-line focus and a bloated management structure, contributing to operational costs that were too high.
The tech at The VOID was what made it stand out.
What James Jensen, their CEO, and Curtis Hickman, their Chief Creative Officer, built seemed like magic to anyone who tried it. But they were so committed to this illusion that they bloated their tech stack to make everything seem more remarkable than it was. Custom helmets that housed components from off-the-shelf headsets, custom backpacks with haptics, expensive pulley systems to help get customers in and out of their gear (but which still required a large labor force), and an optical tracking system designed for movie production that cost millions and required senior technical staff to keep running.
One of the core problems with the business model was the length of experience. The first Ghostbusters experience clocked in at about 12 minutes. Each game got progressively longer, with The Avengers’ runtime reaching 25 minutes. Even at almost half an hour, their experiences were short diversions, not dedicated occasions.
Since The VOID’s real estate strategy wasn’t aligned with its target audience, customer acquisition became challenging. The VOID was attractive to a demographic that wasn’t frequenting the locations where they operated, so they needed to market like a destination attraction. At an average of 15 minutes per session, the game length wasn’t long enough to consistently drive sufficient dedicated traffic. They never seemed to identify this problem, thinking the answer was opening more locations to build visibility. But growing a retail business without solid single-store economics is a recipe for failure.
The VOID raised a ton of money from different companies. The VOID graduated from the Disney Accelerator Program in 2017 and took investments from Westfield Development, Cinemark, Genting Malaysia, Meraas, and other real estate and entertainment firms. These were strategic investments for these companies; each had its expectations of what its investment in The VOID would yield. Being the veteran of several venture-backed startups with dysfunctional boards, I can only imagine how management was being led to make decisions that might have been good for the investor but not necessarily for The VOID.
In the movie City Slickers, Jack Palance’s character Curly uses colorful language to explain to Mitch and his friends that the secret to life is “one thing”. While that might be true, it’s rarely one thing that leads to a business failure of this magnitude. The VOID was a complex business. When I first observed their business in 2017, I commented that they were trying to build colonies on Mars when we had not even set foot on the moon as an industry. While they shut down under cover of the pandemic, these are some real reasons they were doomed to failure from the beginning.