By: Howard McAuliffe, Pinnacle Entertainment Group


“What if I could put a bracelet on you that could block a nerve and make you drop something in the game, give you the sensation of having something knocked from your hand?”  This was a quote from Alex Kipman, Technical Fellow-AI and Mixed Reality at Microsoft, during the VR Arcade Conference & SAM-I Esports Conference at the Microsoft Reactor in San Francisco.  The concept of a game experience that intense is frankly terrifying, but also where game development is headed.  The redemption arcade of today is a business model that is exciting, profitable, and still growing rapidly.  That being said, it is important to keep our heads up with an eye towards the future.  When the VR Arcade Conference extended us an invite to this conference, we took the opportunity to go see what is happening in the VR arcade and eSports space.  The overall takeaway is the space is focused heavily on out of home entertainment.  The big corporations that are developing VR and AR technology such as Microsoft, Samsung, and HP, are interested in building a market for VR and AR as a step to building an in-home market for their technology.  They see the video game arcade of the 1980’s as the model to replicate.  Build the audience for the games, until the technology is small and cheap enough to sell to the masses for home use.  In the 1980’s this led to a crash in the arcade market, and many companies going out of business.  So as an industry should we help develop a market for this technology knowing the goal is to shift the business model away from us and to the home?


We think the answer is yes for several reasons:


  • The amount of money being poured into the technology is so great that it will be brought to market one way or another. It is already profitable in many out of home concepts and will likely become more profitable in the near future.


  • VR is a relatively small percentage of the revenue in an FEC, we don’t see it making the redemption arcade obsolete. In fact, our data shows adding VR brings new customers to the arcade and increases the revenues of redemption and other arcade games.


  • Even now 25 years after the “video game crash” there are many arcades making significant profits on video games, there will probably be a place for VR in out of home entertainment for years to come even if it moves predominantly to the home.


  • Most of the operators looking at developing VR and eSports facilities are from the world of movie studios, big technology, and finance. Our skills at operating in these environments can be extremely valuable.


VR and AR will have a place in the future of out of home entertainment.  Rather than fear and resist this in order to try to protect what is working today, we should embrace these new technologies so we are ready for what will be working in the future.