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Virtual reality franchising: An overview

Virtual reality franchising: An overview

Virtual reality (VR) has emerged in the last decade as one of the most exciting and viscerally exhilarating ways to enjoy various forms of media. Whether it’s using your headset for some VR gaming or using it to practice for your driving test, the limits of the technology are truly endless.

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Words by Raghav Patel, digital content writer at Global Franchise

VR has made its way to the franchising space too, with a multitude of educational, gaming and experiential VR franchise businesses including the likes of VR Drive, VRVE and CTRL V expanding throughout the market.

VR gaming has been the greatest thrust behind the technological innovations we see today in the VR industry. While early advancements were made into virtual reality before 2010 by the likes of Google for StreetView, the real breakthrough came from Palmer Luckey and the design of the Oculus Rift prototype, which was eventually sold to Facebook for an eye-watering $3bn in 2014. This was in a year when the global virtual reality hardware and content revenues reached $108m.

In the early years, the choppiness and distorted nature of the image in the headset was the driving force behind the innovations that has made VR gaming, and consequently VR on a whole, a far more stable and consistent form of media. Game developers made technological innovations with VR, to the point that the European Union Aviation Safety Agency (EASA) has approved the use of VR headsets as flight simulation training devices.

Where is VR being used and innovating today?

VR entertainment is undoubtedly the largest space in the VR industry, and VR gaming takes up the largest segment. With the worldwide VR market valued at around $4.8bn in 2021, it’s fair to say the $1.4bn segment of this market is one of the greatest drivers of growth and innovation, as well as revenue.

Steam, one of the largest gaming platforms worldwide, has reported great success with its VR offering in 2020. The few statistics available showed that there were 1.7 million VR users in 2020, and a massive 71 per cent increase in revenue from VR entertainment.

The Toyko Olympics has been a source of innovation that looks to both improve the spectator experience, but also account for the inability to travel and watch athletes perform live. Typical swimming events consist of spectators’ eyes switching from the screen and swimmers in the water, creating small gaps in the action for the spectator.

With virtual reality/augmented reality headsets, information from the screen can be in the same frame of view as the swimmers in the water, removing the need for spectators to swing their heads between the action and a screen.

Akaji Tanaka, experience designer for NTT Docomo, a leading Japanese network provider, believes there is far more to come. “In the future, we could send competition data directly to another pool set up in another location — replicating the swimmers in the pool and all the data that comes with it via those glasses and casting it over the empty pool,” said Tanaka, when speaking with euronews.

“I think spectators will be able to watch and participate in sports happening very far away without being bound by their physical location”. NBC has already released its VR app to be used with an Oculus virtual reality headset, allowing the user to watch live or catch up to previous events.

VR franchising – who is doing it?

Gaming is not the only segment that has seen innovation. An Israeli firm, VR Drive has created an educational tool that allows learning drivers to simulate the experience of driving a car in a safe, controlled environment. The benefits of a high-class simulation in VR are plain to see, from reduced costs to eliminating the risk from practice going awry. It can also reduce costs for new drivers, with fewer lessons required and the ability to start practicing with VR before they can legally begin lessons.

Whether it’s using your headset for some VR gaming or using it to practice for your driving test, the limits of the technology are truly endless.

A 2018 Swedish study seeking to ask whether users are convinced that their VR experience is similar to driving a car, and whether the experience has prepared them for the real thing, responded positively to both. The study demonstrated with statistical certainty that users do benefit from using VR headsets to practice and get used to driving with a slight concern for simulation sickness.

VRVE (Virtual Reality Visitor Experience) has created a VR entertainment franchise with flagship locations in Exeter and Liverpool, U.K. VRVE allows customers to book hour-long blocks with companions to experience and play a number of games, from first-person shooters to more family-friendly and even an exciting nine-to-five job simulator.

Franchising is effective for prospective franchisees as the start-up costs can often be daunting, with the purchase of equipment alone running into the thousands of dollars. Costs will run even deeper when taking into account the costs of rent, internet, water and general bills and upkeep required with a specialized physical location.

Alatarika is a successful education provider in the VR franchise space, and operates in 18 countries. It provides education through the use of engaging and thoughtful science videos in ordinary classroom lessons, specialized events, and children’s camps. After ten years on the market, Altairika has grown to 103 working franchises, demonstrating the practical and commercial viability of VR franchising.

The education sector of the VR industry is set to be worth around $13.09bn by 2026, up from $656m in 2016. With the impact of COVID and repeated self-isolation, the potential for VR education to skyrocket is certainly there.

Combined with the costs of starting up and either maintaining a physical location or creating high end multimedia content, the barriers to entry can be high but are significantly reduced with franchising options, opening up entrepreneurship to a wider base.

VR gaming and education today

Numerous franchise VR businesses already exist, mainly in the gaming and education world. While COVID-19 affected the virtual reality franchising industry, it largely depended on local laws and individual business arrangements. Steven Wolfson, chairman of the Israel Franchise Institute (IFI) spoke on the behalf of VR Drive: “One of the major pluses and differentiation of VR Drive is the fact you don’t need staff. It’s basically your staff members and teacher already in the program. It’s your VR Drive, it’s your virtual reality teacher. In this case, you only need one person to run the business at the door.”

VR businesses are looking to add locations and grow despite the recent pandemic. VR Drive is in the process of being approved by various governmental departments and bodies, which will provide the impetus for growth. “Right now, we are sitting on 13-14 branches throughout Israel,” said Steven. “But the moment the government gets behind this, we want VR Drive to open 35 to 50 locations. For a small population of eight to nine million, that’s a big chain.”

VR Drive has a great deal of scope for expansion, with 35 locations in Israel serving approximately 250,000 people each. “That means that in the U.K. with a population of 60 million people, let’s say we have one location for every quarter of a million. You actually have the potential of reaching over 200 locations just in the U.K.,” said Wolfson.

“One of the major pluses and differentiation of VR Drive is the fact you don’t need staff, you only need one person to run the business at the door

The scope of the technology is limitless, but it requires adept entrepreneurs to run a franchise and everything that comes with it, as opposed to a passion and competency strictly in VR. Robert Bruski, co-founder and chief financial officer of CTRL V said, “one of the biggest things that I’ve learned in franchising is that to be successful, you really have to realize that you’re no longer running your original business, you’re no longer the arcade operator. You are now in the franchise business. And I think that catches a lot of new franchisors off-guard.”

The future of the industry

The rest of the VR industry will keep their eyes trained on the VR gaming market as it has often propelled innovations and commercial achievement. Alongside gaming, education will soon grow to a sizeable share of the VR pie with the huge benefits and savings it can provide.

VR gaming is an arcade-dominated space; it doesn’t appear as if that will change any time soon. “I think virtual reality gaming is going to be very much dependent on the arcade infrastructure. And the reason being is there’s a lot of companies that are trying to get virtual reality for in-home use,” said Bruski. “And though there are some customers are starting to buy it, the initial influx isn’t as big. The influx hasn’t been as big as with console systems, like the PlayStation or the Xbox.”

Arcades are currently the epicenter of VR gaming, Bruski explains. “As it stands right now, it’s going to be based around arcades, for a number of reasons. I mean, there’s a space requirement, there’s a multiplayer desire from people, there’s a cost factor that goes into it.” Virtual reality arcades are so attractive that teenagers are able to set up and run their own arcade businesses.

VR provides a new space, within which a number of educational programs can be set up without physical locations, numerous employees and working hours.

“Up until now, a pilot that wanted to learn to fly a Boeing 737/747, every aeroplane was built differently. And they would need to create a simulator for every different plane. And that was before VR,” said Wolfson.

“Now, all they need with VR is moving from aeroplane to aeroplane and you just press enter. And now you’re getting via VR, the ability to create simulators for teaching pilots without the hundreds and thousands of dollars normally spent in the old style of simulators.”

Innovations in the VR market aren’t uniformly heralded. Some technologies are more commercially suitable to adding to current offerings, whereas some are too expensive and complex to adopt straight away. “There is a whole whack of non-headset hardware, like omnidirectional treadmills, haptic feedback, all this sort of stuff,” said Bruski. “But I’m not too excited about that yet, because traditionally, it hasn’t delivered upon what it’s promised. It doesn’t feel as natural as you expected. There isn’t too much commercial reasonability behind it.”

Current VR franchise opportunities

While VR franchising may look a little too futuristic, it clearly has takers today and isn’t dependent on great leaps of technology to make it a viable business opportunity.

CTRL V is a VR gaming franchise that already boasts nine locations with a huge gallery of 143 games, suitable to a variety of ages and groups. Since the brand opened its first flagship store in Ontario, Canada in June 2016, CTRL V has logged over 490,000 unique customers and is the world’s largest VR arcade chain in the world. Franchisees can expect their input to be counted in the development team too, allowing franchisees to influence the content their customers pay for.

Though golf is an enjoyable and relaxing sport, research indicates millennials are moving away from the sport due to the expense and time required to enjoy a day on the course. X-Golf has attempted to come up with a solution: golf in virtual reality. Through the use of sophisticated technology, the brand is able to provide players with accurate information on their swing in the comfort of a small indoor bay. Since opening in 2015, X-Golf has expanded to five locations.

Anvio VR is growing at a rapid pace and can be called a truly international franchise, with its first location in Moscow and later spreading to Bogota, New York, Hong Kong, and 14 more locations. Anvio releases two games a year for its specialized physical locations. Anvio also develops its games in conjunction with its playing spaces that come in three sizes, which each having their own unique benefits depending on the location of the arcade.

There is a plethora of VR franchise businesses set up across the world with widely differing investment requirements, allowing for a wide variety of entrepreneurs to set up businesses in the virtual reality industry.

VR franchising will become mainstream

Virtual reality is one of the most romantic technologies in existence today, and tends to spark the inner child, especially when used for entertainment/gaming purposes. It provides a low cost, low risk way of enjoying activities we can do in everyday life and accentuate the world of gaming to a new level. It’s a large industry too, with 58.9 million people expected to use VR at least once a month in 2021, representing 17.1 per cent of the U.S. population.

Virtual reality can disrupt the world of education too, and is already doing so; technology exists in the bricklaying industry to teach trainees before they ever reach a site, reducing costs for the company and increasing competency quickly.

As a business that typically requires a great deal of knowledge and investment, VR franchising is a viable route for entrepreneurs to foray into this exciting market with support from experts and financial relief, and is only likely to grow in the future.

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