- Virtual reality has not taken off as expected.
- Nonetheless, start-ups such as Dreamscape are betting on immersive VR arcades, in hopes that they will get people out of their houses.
- Other players include SPACES, backed by Comcast Ventures, and The Void, which Disney invested in through its incubator program.
Virtual reality has not taken off like many predicted it would.
IMAX announced this week it is shuttering all of its VR centers across the globe by early 2019. After four consecutive quarters of declines, IDC says headset shipments grew by 8% in the third quarter of 2018 — not exactly stellar growth.
But that's not stopping VR startups from betting big on "location-based entertainment," in hopes of getting consumers to leave their homes to experience the technology in ways they can't from the comfort of their couch. VR reaserch firm Greenlight Insights predicts the location-based market for virtual reality experiences will grow to $12 billion within the next five years.
Dreamscape Immersive -- backed by Hollywood's biggest players including IMAX IMX-CA , AMC AMC , Fox and Warner Bros. -- is opening up its first permanent location this weekend in one of Los Angeles' biggest malls, with plans to open more venues in four other cities across the country.
For $20, customers get geared up with a backpack, headset, and hand and feet sensors — gear worth thousands of dollars, far out of reach for ordinary consumers. Customers can pick between one of Dreamscape's three immersive storylines that last about twenty minutes, for an experience that's been described as a cross between a movie and an amusement park.
"We believe that location-based VR is the tip of the spear as it were for the entire VR industry. It will get people exposed to how unique this medium can be and also those of us who create it, we are learning the capability as well. It's the first time that the technology has come together, not just the backpacks the headsets and the tracking, but even the physical optics in a way that we can really learn the vocabulary of this new medium," Dreamscape CEO Bruce Vaughn told CNBC.
Vaughn says the company's first move is to get venues opened in key locations, but he is already looking at the prospect of stepping into consumers' homes.
"Being able to network people from the home is something we are very interested in. So you could be at home and be participating in any of the experiences in our VR locations with other people," says Vaughn. "You can imagine there is a social aspect to that."
With AMC as one of the company's biggest backers, Dreamscape is betting that the synergy between Hollywood and virtual reality will help draw moviegoers. The company says some locations will be standalone locations, while others will be incorporated into AMC theaters.
Veteran film producer Walter Parkes, known for franchises such as "Men in Black," co-founded Dreamscape with the hope that VR will become as popular as going to the movies.
"I think what's happening in Hollywood right now, is that the studios sense there is something out there. They also sense there are many reasons for people not to go to movies at theaters: the ability to stream at home, how extraordinary the televisions and sound is. So they are very anxious not only to see VR succeed in and of itself, but also create more energy around places like this that sort of support the communal aspect of film going that is really at the essence of what we do in Hollywood," Parkes told CNBC.
Dreamscape is part of a larger trend of startups building out physical retail VR locations. SPACES, backed by Comcast CMCSA Ventures, recently opened a new "Terminator Salvation" VR experience at one of Southern California's largest malls in Irvine. And The Void, which Disney DIS invested in through its incubator program, is expanding to 17 locations this year, featuring a virtual Star Wars experience.
Disclosure: Comcast Ventures is part of Comcast, which is also the parent company of NBCUniversal and CNBC.
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