A recent tweet by Ian Laffey highlighted the significant potential of Virtual Reality (VR) attractions in major cities of "2nd and 3rd world countries," asserting that their "marginal cost is 0" and "customer value is high in these markets." This perspective points to a burgeoning opportunity within the global VR landscape, particularly as the virtual reality in tourism market is projected to reach nearly $60 billion by 2033, driven by immersive experiences and marketing potential.
The concept of high customer value in developing nations stems from several factors. VR arcades and attractions offer an immersive entertainment experience that is often inaccessible to individuals due to the high cost of personal VR headsets and the space required for home setups. This makes location-based VR a compelling proposition, providing a gateway to cutting-edge technology and unique entertainment for a broad audience. The Asia-Pacific region, for instance, is experiencing rapid growth in VR adoption, fueled by economic development and a tech-savvy population, indicating a strong demand for such experiences.
However, Laffey's assertion of "marginal cost is 0" requires closer examination. While the digital nature of VR content might suggest low replication costs, operating a VR attraction involves substantial ongoing expenses. These include significant initial investments in high-end VR equipment, continuous licensing fees for games and experiences, rent, utilities, and staffing. Industry reports indicate that managing operational costs, including employee salaries and software licensing, is crucial for profitability. The history of VR arcades in regions like China has shown a boom-and-bust cycle, where intense competition led to price wars and thin margins, sometimes resulting in widespread closures.
Despite these operational considerations, the market for VR attractions in developing countries holds considerable promise. The increasing integration of VR into tourism and entertainment strategies, coupled with advancements in VR technology and decreasing hardware costs, is making these experiences more accessible. Strategic partnerships with content creators, careful cost management, and diverse revenue streams—such as event hosting and loyalty programs—are key to building sustainable and profitable VR businesses in these emerging markets. The potential for VR to democratize access to immersive experiences and enhance entertainment options remains a strong driver for investment and innovation in these regions.