The technology behind virtual reality is still fairly new and the companies that have sprung up in its wake are very much in their infancy. But in Arizona, a handful of boutique firms have already staked a claim in this new world – from creating immersive cities to opening brick-and-mortar arcades for VR enthusiasts.
VirtualRealityRental.co, which launched in Phoenix in 2015, has tapped into the technology's more practical side, offering VR experiences for corporate events. CEO William Griggs says most of his customers are trying to drive attendance and engagement at such events. So, while some of his clients' employees once dreaded going to corporate events, Griggs says, VR now makes them fear missing one. His customers have seen a huge upswell in RSVPs to their events when VR is part of the program.
“When they reach out to us, they know that VR is new, cool and sexy,” Griggs said. “But they also have the understanding that most people still haven’t tried it. So, they want to position themselves as a fun, cutting-edge company.”
Phoenix’s steadily rising population and its ability to draw corporate events have made it one of VirtualRealityRental’s key targets. Griggs anticipates lots of growth in Phoenix in the years ahead, not only for his company but for the VR business as a whole. "We see this as an untapped market with lots of opportunities.”
An immersive ecosystem
Scottsdale-based Timefire VR has created a massive, collaborative open world called Hypatia. This immersive VR ecosystem allows users to create, market and sell products and services, experience new content daily, and participate in highly interactive activities.
“A few years ago, when I first got funded,” said company founder John Wise, "I knew that I couldn’t compete against the triple-A game companies, and I didn’t want to attempt to compete in the sphere of Hollywood-style entertainment. I didn’t have the skill or the background.
"I thought the social landscape was ripe for the picking and that we would be able to make a profound move into the social world because there was not enough infrastructure. So, just like Facebook came along and displaced Myspace, maybe we could have an impact on social media by creating this Hypatia world.”
What sets Hypatia apart from similar online worlds is content. Wise says the majority of available VR content ranges from just 10-30 minutes. However, Timefire offers over 20 hours of content, and Wise envisions adding 15-20 additional hours of content per year.
“Ultimately, we’ll have some educational benefit,” said Wise, “but first and foremost we’ll focus on the social and the entertaining."
To that end, Hypatia is a mashup of about two dozen world regions and architectural areas, ranging from Amsterdam, Venice and Barcelona in Europe to Wuzhen, China, Sanaa, Yemen, and the remote village of Tiebele in Burkina Faso. Wise says his platform can open up the world to anyone.
“The idea is to bring together architectural and cultural influences from around the world so that a kid in Kansas, for example, who might be limited by economic and geographic isolation, can be brought onto the world stage of culture, education and exploration by this environment.”
Timefire charges customers $29.99 to download Hypatia. The company anticipates over 75,000 downloads this year, with a sharp jump to 816,000 downloads in 2018. At this point, however, Wise says that Timefire is not profitable. Operating cash comes from seed and angel funding. The company initially raised $1 million in capital from Arizona investors before hitting a wall. It then turned to additional investors in New York, from whom Timefire raised nearly $2 million in supplemental funding.
Wise doesn’t see any advantage in the company going public. However, he anticipates more investor capital. Still, Hypatia is a passion project, and Wise appears intent on maintaining control of his concept, which was years in the making.
“Timefire VR is the result of having had an informal education in life,” said Wise. “I didn’t have a formal education. I had the opportunity to live in Europe for 10 years while I was in the military. Then I had the incredible opportunity to spend more than a dozen years traveling extensively in the United States.
"That gave me the recognition that education was going to have to go through some type of system or mechanism. The world that we’re building, using the ideas from things like Facebook and Minecraft, with play and social interaction, might be more conducive elements allowing Hypatia to be that environment.”
It doesn’t appear that there's another company in Arizona doing anything similar to Timefire. In fact, there are hardly any other players in the entire country, says Wise.
But, when he launched Timefire in 2014, Wise says he had already met a number of the people who were going to make VR a household word. The consensus was that it had the potential to become the most social platform ever created.
“But all the early development was focused on shooting, car racing and space games,” according to Wise. “For me, the focus was immediately on social. Today, that social element, combined with the creative gameplay in our world, is truly starting to resonate.”
When most people think of being social, they imagine interacting with other people face to face – at a bar, at a party, at a ball game or at some other kind of event that attracts crowds. VR is turning that notion on its head. People are operating “socially” from their own personal space, such as their home. They participate virtually, and in isolation, yet within a social group.
“But,” noted Wise, "the arcades that are starting up and HTC, which makes the Vive [headset], have been moving toward hardware for a complete experience, where a number of people are together. It looks like the arcades are going to be able to put numerous people in the same space, in the same room.”
An arcade for VR junkies
One such arcade is VR Junkies in Tempe, which launched in February. VR Junkies has seven locations in North America and bills itself as the largest virtual reality arcade in the U.S.
Nate Curtis, co-owner of the Tempe location, says he saw an opportunity and jumped.
“We were impressed with the HTC Vive and the Oculus as an entertainment and productivity tool. But we realized that it was going to take a long time for them to get the cost down to a point where people would put these in their house," Curtis said. "Each one of our systems is $3,000, and that’s a bit much for a video-game console, not to mention that you need 10 square feet of space to really enjoy it. So, there’s a window here for arcades to exist again.”
Video arcades were highly popular in the '80s and they may be poised to experience a VR renaissance. For now, at least, there isn’t much competition in the marketplace, making it a wide-open space.
"Market conditions are very similar to what we were seeing in the '80s when the arcades made their first leap," Curtis said. "Until they figure out how to make it smaller and cheaper, it’s going to have a commercial application. That window may be one year or maybe five years, we don’t know. But right now, it’s sitting out there and it’s a great space.”
Competition is something that Curtis welcomes because he thinks it will bring more exposure to VR. “It’s a much better marketing tool to have other competitors out there than to just be here by ourselves, where nobody knows what we do.”
VR Junkies offers a variety of ways to make virtual reality a social experience. It offers games focused on teamwork or tournaments, allowing customers to enjoy playing with their friends, co-workers or another group.
“That’s definitely what we set up our store to do,” said Curtis. “We have plenty of seating at the stations. We find that the optimal group per station – we call them bays – is probably four to six people. So, your friends can watch you play. We have a big 55-inch TV, where they can watch what you’re seeing through your headset. They know what you’re looking at when you jump or scream or drop to the ground. It tends to be highly entertaining for the spectators as well.”
VR is an entirely immersive world that can overwhelm your senses. It tricks your mind into believing that you are actually experiencing virtual events, and this can be stirring or even dumbfounding for some viewers.
“I’ve had people crying,” Curtis said. “I’ve had people throw their headsets off from being too startled. I think the coolest reactions are from people who are in a wheelchair or have trouble walking or some other handicap or difficulty. I can use Google Earth and put them anywhere in the world. It’s much more than just a video game. It changes everything that people can do.”
Curtis says that while VR Junkies is making money, it isn’t hitting the goals he established. He initially assumed the arcade's eight bays would be able to average a 25 percent utilization rate. However, it’s been closer to 10 percent, he says. While that’s been enough to at least break even most months, it simply isn't good enough for him.
“I’m excited about next winter,” Curtis said, “because right now we’re kind of in the summer doldrums. Now that we have our operations down, in the next tourist season and once the kids start going back to school, I’m optimistic that we’ll start hitting those 25 percent targets.”
What’s most surprising about Curtis’ venture into the VR world is that he’s winging it and operating without a map. In fact, he doesn’t even have long-term plans for VR Junkies.
“I went to Babson College, which is the best in the world in entrepreneurship. I’ve had business plans drilled into me all my life. This may be the first time I’ve started a business without a business plan because we view it as kind of a temporary opportunity. We’re not planning on being in the business for longer than a year to two years. We may not renew our lease. We may just shut it down because there gets to be a point where it doesn’t make sense to keep going.”
That doesn’t mean Curtis plans on getting out of the VR business altogether. Though he sees a time when VR’s newness will wear off and its entertainment aspect will lose some of its shine, at that point he envisions focusing on corporate events and, in particular, education.
“In order to get through the summer, we started running a summer camp,” Curtis said. “The kids are absolutely eating it up. We use the VR to inspire them about the things they want to build, such as computers.”
Teaching and learning may ultimately prove to be the best applications for VR in the future. It may prove to be a useful way to introduce kids to concepts and subjects they might never have otherwise encountered or had an interest.
“It turns out that, after the second day, VR is a distant thought for the kids,” said Curtis. “They’ll do VR because they can’t do programming or robotics. They still like it, but they’d rather be working on these STEM projects.”
That might be encouraging to parents and teachers, who may be inclined to see VR as addictive, unproductive and a waste of time.
“The question is, how do you help kids be productive and learn to operate in constructive ways in that kind of environment?” Curtis asked. “I think we’re on the right path.”