A Virtual Reality: The Rise of Location-based Gaming

Electronic gaming, or eGaming, is an increasingly growing sector in the global entertainment industry. In recent years, with the incorporation of growing markets like VR gaming, it has competed with the more traditional movie and music sectors by taking up a bigger slice of overall revenue.

Revenues in the global entertainment and media market are set to rise 4.4 percent CAGR between 2018 and 2022, (up to $2.4 trillion) according to PwC. Of that number, eGaming will be worth $171 billion by 2025, representing one of the fastest rising segments in the industry at 6.5 percent CAGR. Recent technological advances, such as virtual reality (VR), are at the forefront of the expansion of eGaming.

The battle for market supremacy

For gamers there’s nothing like battling it out with other enthusiasts in a packed arena, and the industry’s growth in popularity has resulted in arcades opening up around the world, especially to fill the demand for eSports. eSports is a segment of eGaming in which players compete in tournaments for large prize pools.

As the global interest in competitive gaming increases, tournaments and leagues have become more sophisticated, and prize pools have increased with sponsorship and advertising money pouring in. Streaming advertising during eSports tournaments grew 35 percent in 2017, and ticket sales in the US grew 19 percent from the previous year. As well, the mobile segment is expected to gain momentum and exhibit growth of 7.3 percent CAGR by 2025, according to Grandview Research. The improved viewing and playing experience that users get from smartphones and tablets is largely responsible for the increase in the eGaming market, accounting for 51 percent of the 2018 revenue and expected to reach 59 percent by 2021.

Virtual reality equipment and VR-based arcades

Perhaps no other technology has risen and fallen only to rise again, like VR. In the 1950s it was considered the future; in the 1990s, a failure; today, it’s a powerfully immersive technology that the world is finally ready to embrace, and in the world of eGames, taken would-be basement dwellers into worlds only imagined. VR enables gamers to indulge in an imaginary setting where the gamer’s physical three-dimensional environment is simulated. With VR equipment and accessories, gamers can move around and interact with objects within a given game. VR technology has become a largely important driver of the popularity behind location-based gaming―which is a game that evolves and progresses based on a player’s location, like the popular Pokemon Go.

VR gaming is projected to grow into a $14.5 billion industry by 2020, according to SuperData Research. Some estimates put it as high as $45 billion by 2025. And for today’s young tech-driven demographic, VR presents the perfect avenue for a new breed of gamers to grow.

“There’s not that much you can do if you’re 13, 14, 15, 16 after school aside from if you don’t play sports,” said George Casseus, head of business development for Brooklyn VR arcade Yokey Pokey. “You just don’t want your kids to play video games at home. They come here and play with their friends.”

Yokey Pokey is just one of eight VR arcades to have opened in New York in recent years. It has 42 headsets ranging from PlayStation VR, Oculus Rift, HTC Vive and Samsung Gear, with approximately 30 gamers playing at the same time, at peak times, according to Casseus.

VR headsets have evolved as the market has expanded. On the low end, you can buy Google Cardboard viewers for roughly $15 to use with your smartphone, while Facebook’s Oculus Rift and PlayStation headset are priced at $399, and the HTC Vive is $799. But the cost of technological advancements is a good sign for the industry. “I believe that VR technology is the greatest innovation since the birth of television,” Atsushi Morita, president of Sony Computer Entertainment Japan Asia (SCIEJA), told CNBC. “VR allows you to travel to World Heritage sites or to space while staying at home. It’s like a time machine or a door to anywhere.”

Examples of VR arcades

Purchasing a headset for hundreds of dollars or fitting your home with the equipment and hardware needed for a truly immersive VR experience isn’t possible for most people. It’s the main reason why VR arcades are popping up all around, providing a better experience and at a reasonable price. In 2016, HTC opened Viveland―a 330-square meter VR arcade inside Syntrend Mall in Taipei. Ctrl V was Canada’s first VR arcade that opened in Waterloo, Ont. in 2016, and has since opened 16 more venues in Alberta, Manitoba and Ontario where players can play for $25 an hour.

This year, YDreams Global Interactive Technologies (TSXV:YD) also launched Arkave, one of the most advanced and immersive VR gaming platforms in the world, at stores in one of South America’s largest shopping malls. A platform designed as a premium product for existing VR arcades, Arkave is a combination of online and physical gaming where users access VR gaming experiences.

“We’ve created a platform for VR arcades that allows three people to play together, so it’s very social, letting you play with your friends,” said CEO Danial Japiassu. “You can see your friends as avatars and communicate with them during the game, playing and interacting together. The other main attraction is that you are free to walk around in a room and play several different games in that space.”

Currently offering nine games that take 10 to 20 minutes to play, the franchisable platform has been deployed in a 300-square-meter storefront in a mall in Sao Paulo that receives over one million visitors every month (22.8 million visitors in 2016). YDreams hopes to scale and deploy the platform in additional VR arcades.

Looking ahead

Since the year 2000, technology has advanced faster than any other period in human history. The result? Among many, the adoption of technology by a younger generation. It’s this younger generation that is primarily feeding the eGaming industry. The mass extinction that video game arcades faced in the 70s and 80s won’t occur to today’s VR gaming industry because expensive equipment and the requirement of commercial space prevent users from taking the virtual reality experience home.

This article was originally published by the Investing News Network in May 2018.

This INNspired article is sponsored by YDreams Global Interactive Technologies (TSXV:YD). This article was written according to INN editorial standards to educate investors.