next-upnext upauthorJanko RoettgersNoneDo you know what's coming next up in the world of tech and entertainment? Get Janko Roettgers' newsletter every Thursday.9147dfd6b1
×

Get access to Protocol

I’ve already subscribed

Will be used in accordance with our Privacy Policy

People

The VR gaming centers of the future may not survive the crisis of today

VR centers and arcades were growing quickly before the pandemic. Now, the industry is seeing furloughs, layoffs and pivots.

People wearing VR headsets

Customers of The Void, one of many location-based VR companies hit hard by the pandemic, put on their headsets in Anaheim, California in July 2018.

Photo: Veronique Dupont/AFP via Getty Images

The COVID-19 crisis hit most tech companies hard, but it buried Sandbox VR. "We went from a relatively healthy business," CEO Steve Zhao said, "to zero revenue." Sandbox was operating 10 VR centers in North America and Asia that allowed groups of customers to step into virtual worlds. Every one had to close due to shelter-in-place orders. "Literally, 100% of the revenue is gone," Zhao said.

At the end of April, Sandbox laid off 80% of its staff. Among the departures were then-CEO Siqi Chen and many of the company's key developers. Left with a skeleton crew of 20, Zhao is now trying to figure out not only how to reopen existing locations but survive. "We have to rethink our strategy," he said.

Sandbox VR is not alone in its struggles. Numerous operators of VR centers and arcades, including The Void, Dreamscape, Zero Latency and Spaces, have been forced to shut down their retail locations amid the pandemic and are now facing major financial and logistical challenges. It's an abrupt change of fate for an industry that just months ago was seen as a pivotal booster of VR, and heralded by some as the future of theme parks and other forms of location-based entertainment.

'We're going to address it head-on'

Among the more prominent companies in the still-nascent industry is The Void. Founded in 2015 and backed by Disney and James Murdoch, The Void has been operating more than a dozen VR centers across North America, Europe, Asia and the Middle East, selling experiences based on Hollywood franchises like "Ghostbusters," "Star Wars" and "Jumanji."

Guests put on a custom headset connected to a backpack that includes a computer to render VR graphics and a rumble vest for tactile feedback. The absence of cables allows customers to roam across a stage outfitted with walls, doors, levers and other physical props that correspond to the virtual worlds they enter.

It was mid-March when the company decided to pause its owned-and-operated locations. "They all went dark on the morning of the 18th," Chief Marketing Officer Jamie Apostolou said. The company furloughed its retail personnel, while the rest of the staff has been busy working on reopening plans, which it aims to detail in the coming weeks. "There is a lot of work to do," Apostolou said.

Key to reopening any VR center will be addressing safety concerns. "When you go somewhere where you have something that you put on your face that someone else has put on their face … that's a challenge," Digi-Capital Managing Director Tim Merel told the audience of the Augmented World Expo in May.

"We already had a very tough and robust cleaning process," Apostolou said. But now he figures that's not enough. Though The Void in the past hid a lot of the operating minutiae from its audience, believing it would detract from the magic of the experience, it aims to be more upfront going forward. "We're going to address it head-on," he promised.

People on a "Star Trek" VR ride Guests on the Dave & Busters VR ride during the Star Trek Convention at the Rio Hotel & Casino in Las Vegas in July 2019. Photo: Gabe Ginsberg/Getty Images

In addition to robust cleaning of headsets, props and the space itself, The Void will include social distancing indicators in its locations, and initially operate them under limited capacity. "We will be taking a conservative approach out of the gate," Apostolou said.

The Void's locations include the Mall of America near Minneapolis, the World Trade Center complex and the Grand Canal Shoppes at the Venetian in Las Vegas — in other words, costly prime real estate. Operating these locations profitably with limited capacity and increased staffing won't be easy, even if consumers eventually return. "It's going to be a challenge for everybody, ourselves included," Apostolou admitted.

From billion-dollar forecasts to a 'tsunami'

That kind of caution stands in stark contrast to the optimism that dominated the industry over the past couple of years. While headset sales remained below expectations, location-based VR began to bring in some real money, and became a light at the end of the tunnel for VR and out-of-home entertainment alike.

In late 2018, Dave & Buster's said its first-ever VR ride was the biggest game launch in the company's history. "It was a dynamic, fast-growing industry with global reach," said Greenlight Insights analyst Alexis Macklin.

Greenlight, which focuses on augmented and virtual reality market research, estimated early this year that the location-based VR market would grow to a $34.6 billion business by the end of 2020. "This means absolutely nothing now," Macklin said during a presentation at AWE. She cautioned that consumers may not be willing to pay for VR attractions well into 2021, adding, "We eventually expect the location-based entertainment market to recover."

Merel was equally cautious: "We are taking a negative view on location-based entertainment in both the short and medium term," he said, "and we are hoping for a recovery in the long term."

Not everyone is willing to wait that long. Like the rest of the industry, location-based VR startup Spaces had to shut down all of its VR rides and experiences in the U.S., China and Japan over the past couple of months. "COVID-19 felt like a tsunami for us," said co-founder and CEO Shiraz Akmal. With no immediate recovery in sight, Spaces pivoted to build an application that allows VR users to teleport, via avatars, into Zoom video calls. "We like to keep busy making things," Akmal said. "We can't sit around waiting a year for something to return."

The Spaces team hasn't given up entirely on location-based VR. "It's still a business and an area that we think has a lot of potential to deliver amazing experiences," said co-founder and CTO Brad Herman. But the company is not confident of a quick recovery, especially for startups like theirs that partnered with theaters and theme parks. "Even if parks open up, which they are trying to do," Akmal said, "we don't see them spending money on building new things for a while."

At Sandbox VR, Zhao has abandoned much of the company's 18-month roadmap, which included ambitious plans to build an SDK for outside developers. Instead, the company wants to focus on perfecting the safety and fidelity of its existing attractions to offer returning consumers the best possible experience. "When they do go out, we want to make sure to give them a good reason to," Zhao said.

Sandbox VR will also put a bigger focus on Asian markets, where the recovery is faster than in the U.S.. Still, Zhao acknowledged the location-based VR industry faces an uphill battle for some time to come. "We are all collectively suffering right now," he said.

Microsoft wants to replace artists with AI

Better Zoom calls, simpler email attachments, smart iPhone cases and other patents from Big Tech.

Turning your stories into images.

Image: USPTO/Microsoft

Hello and welcome to 2021! The Big Tech patent roundup is back, after a short vacation and … all the things … that happened between the start of the year and now. It seems the tradition of tech companies filing weird and wonderful patents has carried into the new year; there are some real gems from the last few weeks. Microsoft is trying to outsource all creative endeavors to AI; Apple wants to make seat belts less annoying; and Amazon wants to cut down on some of the recyclable waste that its own success has inevitably created.

And remember: The big tech companies file all kinds of crazy patents for things, and though most never amount to anything, some end up defining the future.

Keep Reading Show less
Mike Murphy

Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.

Politics

In 2020, COVID-19 derailed the privacy debate

From biometric monitoring to unregulated contact tracing, the crisis opened up new privacy vulnerabilities that regulators did little to address.

Albert Fox Cahn, executive director of the Surveillance Technology Oversight Project, says the COVID-19 pandemic has become a "cash grab" for surveillance tech companies.

Photo: Lianhao Qu/Unsplash

As the coronavirus began its inexorable spread across the United States last spring, Adam Schwartz, senior staff attorney at the Electronic Frontier Foundation, worried the virus would bring with it another scourge: mass surveillance.

"A lot of really bad ideas were being advanced here in the U.S. and a lot of really bad ideas were being actually implemented in foreign countries," Schwartz said.

Keep Reading Show less
Issie Lapowsky
Issie Lapowsky (@issielapowsky) is a senior reporter at Protocol, covering the intersection of technology, politics, and national affairs. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University’s Center for Publishing on how tech giants have affected publishing. Email Issie.
People

The year our personal lives took center stage at work

2020's blurring of professional and personal boundaries exacerbated disparities, humanized leaders and put personal values front and center.

In 2020, the personal and the professional became inextricable at work.

Photo: Tom Werner/Getty Images

For those of us lucky enough to keep our jobs and privileged enough to be able to work from home, our whole selves were bared at work this year. Our homes and faces were blown up for virtual inspection. Our children's demands and crises filled our working hours, and our working mothers became schoolteachers and housewives, whether they wanted to or not. Our illnesses became vital public information, and our tragedies shared. Our work lives ate into our social lives until there was no boundary between them.

In 2020, the personal and the professional became inextricable at work. Remote work might be the most sexy 2020 trend, but for the CEOs and leaders I spoke with, the de-professionalization of work could be the most important effect on a personal level. It's the one that has caused the most harm to women in the workplace and destroyed work-life balance for basically everyone. It's also what has contributed to the majority of work-from-home Americans being more satisfied with their work lives than they were before, mostly because they feel more connected to their families, they're able to set their own schedules and they're more comfortable at home, according to a Morning Consult poll. While we can't know exactly how many and who will be going back to the office just yet, as long as there is some kind of flexible work schedule, people's personal lives will be part of their work lives and vice versa.

Keep Reading Show less
Anna Kramer

Anna Kramer is a reporter at Protocol (@ anna_c_kramer), where she helps write and produce Source Code, Protocol's daily newsletter. Prior to joining the team, she covered tech and small business for the San Francisco Chronicle and privacy for Bloomberg Law. She is a recent graduate of Brown University, where she studied International Relations and Arabic and wrote her senior thesis about surveillance tools and technological development in the Middle East.

Protocol | Enterprise

How Christian Klein’s reboot of SAP’s strategy is working out

The pandemic wasn't kind to the company. But the way it's working with the major COVID-19 vaccine makers is a model for what comes next.

Christian Klein became SAP's sole CEO in April.

Photo: Picture Alliance/Getty Images

Christian Klein took over as SAP's sole CEO in April. It wasn't an ideal time to take the helm of an organization that sells expensive enterprise software.

As the spread of COVID-19 forced corporations everywhere to cut costs, one of the first places they looked was IT budgets. Specifically, companies around the world trimmed spending on back-end products, such as those offered by SAP, many of which still run via on-premise data centers.

Keep Reading Show less
Joe Williams

Joe Williams is a senior reporter at Protocol covering enterprise software, including industry giants like Salesforce, Microsoft, IBM and Oracle. He previously covered emerging technology for Business Insider. Joe can be reached at JWilliams@Protocol.com. To share information confidentially, he can also be contacted on a non-work device via Signal (+1-309-265-6120) or JPW53189@protonmail.com.

Politics

Congress is unleashing the FTC on COVID-19 scammers

The second stimulus package will expand the FTC's authority to penalize companies promoting fake information and faulty products.

The FTC will finally have the authority to immediately fine scammers touting fake COVID-19 treatments and lies about pandemic government benefits.

Photo: Al Drago/Getty Images

The FTC will finally have the authority to fine scammers touting fake COVID-19 treatments and lies about pandemic government benefits, thanks to new language in the economic stimulus package set to pass on Monday.

COVID-related scams proliferating online have overwhelmed government agencies and cost Americans more than $145 million since the beginning of the pandemic — and the FTC has been almost powerless to stop them, thanks to limitations on the agency's authority.

Keep Reading Show less
Emily Birnbaum

Emily Birnbaum ( @birnbaum_e) is a tech policy reporter with Protocol. Her coverage focuses on the U.S. government's attempts to regulate one of the most powerful industries in the world, with a focus on antitrust, privacy and politics. Previously, she worked as a tech policy reporter with The Hill after spending several months as a breaking news reporter. She is a Bethesda, Maryland native and proud Kenyon College alumna.

Latest Stories