If you are a VR game developer, licensing your game to VR arcades is a good way to earn some extra revenue on top of your regular game sales. I am very fortunate to have had the experience and opportunity of licensing Sairento VR to hundreds of seats in VR arcades across the world.
VR arcades will typically obtain a license based on either of these 2 models.
1) Fixed monthly subscription model
2) Time based model
Most arcades prefer to pay us through Model 2 because they feel that having a fixed monthly subscription fee is too taxing on their operational costs.
The problem we find however with the time based model is that as a game developer we are getting paid too little and there is also the risk of dishonest reporting if the reporting system belongs to the arcades themselves. On the other hand, if we are making use of a 3rd party reporting system, we would have to give away part of the earnings to the 3rd party.
So let’s examine the situation.
- VR arcade owners want to load up many VR games in their arcades because they think that will attract visitors.
- When they do so, it would cost too much for them if they adopt Model 1.
- Hence they prefer to pay based on how much time is being spent on the games, which is Model 2.
- What arcade owners do not realize is that the more games they offer, the more overwhelmed arcade visitors become, taking more time to decide, spreading their time over too many games and not getting to find a game they really like.
The end result – the customer gets a bad experience and may not return, and the game developers get paid peanuts because very little time is spent on their game. The arcade owner thinks he is getting the better deal because he gets paid his entrance ticket fee anyways. What he does not realize is that he is ruining his own business in the long run.
Here’s what I think may work better for everyone.
For VR Arcade Owners
- VR arcade owners need to settle on a small but well-diversified range of high quality games to put in their arcades. Eg. 2 x FPS, 2 x horror, 2 x whimsical, 2 x experiential, 2 x multiplayer and so on.
- Before the customer starts playing, profile the customer’s game genre preferences and recommend a realistic number of games to play within the time allocated to the customer. Less is more in this case. Think of it as offering a sampling of a few high quality dishes instead of a smattering of mediocre quality food.
- Pay a fixed monthly rate to the game developers, but negotiate for discounts. Be honest and transparent how they are mananging and balancing profits and costs. (The cost should be more manageable now since the owner doesn’t go crazy with his selection of games, which is better for business in my opinion. )
- Create a good overall experience for your customers. Don’t just focus on the games. Consider the decor, drinks, t-shirts, toys, etc. Work with select game developers to co-develop merchandise as giveaways or to sell. Work out a loyalty reward system to give visitors a reason to keep coming back.
For VR Game Developers
- Focus on making a great game. Once you have a great game you have negotiating power.
- I recommend that you stop licensing your games based on the time-based model. Take it from me. It’s not worth your time and effort. We are gradually winding down on this model too.
- Rather, negotiate for a monthly subscription fee, but make it fair and reasonable for the arcade owners. VR arcade owners need to take care of the game developers’ interests and likewise, vice versa.