Not much happened over the holidays. Unless you’re Virtuix, which officially filed its S-1 to list on the Nasdaq. Now, filing to list isn’t the same as ringing the bell, and they aren't trading quite yet. But for a company that started on Kickstarter to be at the doorstep of the public markets under the ticker "VTIX" is a significant milestone. The company is a long way from profitability, but is showing strong sales growth. We wish Jan and the whole team at Virtuix the best of luck. And encourage their investors to hold on for the long term.

And in One Big Thing, well, just read it. Happy New Year.

"The treadmill might be the best metaphor for what it's like building a VR business.”

NEW DEVELOPMENTS

Virtuix Files for Nasdaq: The Omni Treadmill Maker Moves Toward a Direct Listing
In a major step for XR hardware transparency, the pioneers of 360-degree locomotion have filed their registration statement with the SEC to list on the Nasdaq, signaling a potential new exit path for LBE tech players. Read more...

Netflix and Warner Bros. Discovery Merger Speculation: A Potential Catalyst for Immersive Attractions 
Industry veteran Bob Cooney explores how a potential tie-up between these media giants could combine Netflix’s aggressive LBE expansion with Warner Bros.’ deep library of IP to reshape the landscape of location-based entertainment. Read more on BobCooney.com

Fly to the Moon with Birdly: Somniacs Unveils Its Next Giant Leap for Immersive Flight 
The pioneers of full-body VR flight have launched a new lunar exploration experience that combines their signature motion hardware with stunning celestial visuals to let users experience gravity-defying space travel. Read more...

Spiders and Avatars: How Zurich’s New VR Museum is Redefining the Guest Journey 
By blending high-fidelity avatars with educational "creature encounters," this Swiss institution is showcasing how VR can transform a traditional museum visit into a sophisticated, high-throughput immersive adventure. Read more...

Theme Parks Pivot to "Micro-Parks" to Capture Regional Audiences 
Major entertainment companies are moving away from multi-day mega-resorts in favor of smaller, more affordable, and shorter-duration attractions designed for local markets and regional day-trippers. Read more on The Wall Street Journal.

Stranger Things Finale Powers New Year’s Concession Windfall for Profit-Strapped Theaters 
Sources indicate that the free-to-consumer theatrical play of the Stranger Things finale generated between $25 million and $30 million in concession revenue over the New Year’s holiday period. Read more on Deadline.

One Big Thing

A Conversation with Blaise Witnish, CEO of Funlab - Part 1

Editor’s note: This is part 1 of a 2-part interview, edited from a Deep Dive webinar for clarity and length. All questions and responses remain verbatim in substance, with repetition and transcription artifacts removed. Zero Latency sponsored the webinar, but the content was all created without their editorial input or control. 

I decided to transcribe the deep dive I did with Blaise Witnish last summer because the video on YouTube only has 48 views so far, which means that 8000 people who get this newsletter are losing out on some of the most critical insights in location-based VR, from one of the most experienced operators in the world. If you prefer video, here it is.

Bob Cooney: Blaise! So how are you?

Blaise Witnish: I’m really good. Lots happening with Funlab, lots happening with me, lots to talk about.

The last three years, I’ve been busy opening venues across the southwest of America. We’re opening our flagship in Irvine Spectrum towards the end of November, and we’re bringing our second brand, Hijinx Hotel, into the US. 

Funlab, Zero Latency, and the Long Decision Cycle

Cooney: I’ve been a big fan of Funlab ever since we first connected through Zero Latency back in the early days, around 2016 or 2017. What was the thinking behind finally going with Zero Latency? Because I know that was a lengthy consideration process.

Blaise: It took a long time. Funlab has always travelled a lot. Australia’s only about 25 million people — we’re a pimple compared to Europe or the US — so we’ve always looked overseas for direction in entertainment.

As VR emerged, we tested a lot of content globally. We were looking for something lightweight — meaning the packs and guns — because we trade day and night and need broad appeal. We wanted confidence that the content rollout wouldn’t just suit a niche market.

Quality mattered. The kit mattered. The clarity of content mattered.

And after all that due diligence, we literally landed back on our own doorstep with Zero Latency. They’re literally around the corner from our headquarters. Which was kind of hilarious — we could have saved a lot of money and air miles.

Cooney: And you proved a lot of people wrong opening it at District Docklands.

Blaise: We did. People said we were crazy — Archie Brothers, Zero Latency, Strike Bowling — all in what they called the white elephant of Melbourne. But it’s been a tremendous success.

Location Strategy and Trade Areas

Cooney: What’s interesting is that Docklands is really close to the original Zero Latency store in North Melbourne.

Blaise: Yes — and it worked because the trade areas are completely different. There was zero cannibalization. 

Cooney: What do people misunderstand about the proximity of competitive experiences?

Blaise: They look at distance, not behaviour.

North Melbourne, where Zero Latency’s original venue was located, pulls a very different market than District Docklands, even though it’s only 2.3 kilometers away. Docklands has major arterials and pulls from 40–45 minutes away. Once you really understand your trade area, locations can be close but not overlap.

Cooney: What tools are you using to understand that?

Blaise: We use Placer.ai. I highly recommend it. You can understand trade areas, competitors, where guests eat before or after, whether they come straight from work, and almost everything else. It leverages mobile location data from smartphones. It’s an essential investment when you’re making multi-million-dollar decisions.

Cooney: Some operators see the price and panic.

Blaise: Then they should work with better brokers. Most good buyer agents already have access — you just need to demand the data.

Zero Latency as an Anchor Attraction

Cooney: You’ve mentioned a few times that Zero Latency works really well as part of a precinct rather than just as a standalone attraction. How do you actually think about its role inside a multi-brand venue?

Blaise: It’s really its own anchor, right?

We have true destinational concepts where people can literally go to Zero Latency, do Zero Latency, and go home and be really happy. But obviously, the idea is to cross-sell.

What we’re really trying to create is an entertainment hub — a habitual place where people keep coming back and say, “We just go to Funlab because that’s where you go.”

Cooney: So the precinct itself becomes the destination.

Blaise: Exactly.

At Docklands, for example, you’ve got Archie Brothers, Strike Bowling, and Zero Latency. They all work really harmoniously.

You can move from one brand to another, but they’re definitely their own distinct brands. They have their own look and feel. They have their own entry.

Cooney: And you didn’t just drop Zero Latency into a generic space.

Blaise: No — and that’s something we’re really proud of. We didn’t just take Zero and put it into a cold shell and not invest in it.

We’re obsessed with guest experience. We talk about it all the time. We want people to feel like they’re truly escaping in every one of our brands. We worked really closely with the team at Zero and said, “How far can we stretch this?”

When guests walk through the entry and into the holding area, we want them to feel like they’re being transported into another world.

Cooney: And that carries through all your Zero Latency locations.

Blaise: It does. I think we’ve done that really well in every location where we have Zero.

Cooney: How much does Zero Latency function as a destination inside a multi-attraction precinct?

Blaise: What we see is that about 20% of people who come to do Zero Latency as a destination then spend money in one of the other brands.

Cooney: That’s massive. 

Blaise: The bigger opportunity is visibility. We’ve identified 100% that, as soon as people can see someone playing physically, you are twice as likely to get that sale. That stat is ridiculous.

Cooney: What do you mean by “see people playing”?

Blaise: We design it so people can look straight in. They see the laughter, the sense of play, the chaos. They see the screens showing what the players are seeing. They’re watching people physically moving through space.

That combination — the real-world movement plus what’s happening in the headset — removes fear immediately.

Someone walks past, and an employee says, “Hey, come and check out Zero Latency,” and instead of trying to explain it, they just look in. They get it. And that’s where walk-ups come from.

That’s probably one of the biggest keys to cross-sell and walk-up sales in our venues.

Cross Selling with Tasters

Cooney: Research shows that people who have done VR are willing to pay way more to do it again than people are willing to pay the first time when they haven’t done it. How do you get them from being spectators to customers? 

Blaise: We're allocated a limited number of freebies where we don’t pay a royalty, and we use them carefully. There are a couple of games that are 10 or 15 minutes, or we’ll allow people to play five minutes of a longer game. 

We’ll get them to put the VR on, hold the gun, get a sense of it, and even turn it on so the fear of what that is is removed. Then we’ll say, “Hey, play for five minutes. If you love it, then you pay for it.”

And it’s like a 95% hit rate.

It sounds a bit ballsy. But to your point, consumers — the mass, not hardcore VR players — you’ve got to demystify what it is. You’ve got to demystify the content and expose its amazing quality and how immersive it is.

As soon as people are in that space and in that world, everything changes.

Cooney: So you let them do it for free, and then you charge them on the back end?

Blaise: Yeah. Do five minutes. I’ll do you this deal. Do five minutes, I’ll shut it off, and then you can leave. Or if you want to play the whole game, you have to pay. And as I said to you, it’s like a 95% hit rate.

So at five minutes, the game master hits pause and says, “Okay, you’ve got a choice. Do you guys want to continue?” 

And everyone’s like, “Oh my god, we want to keep playing. This is incredible.”

We make them pay at the end, but you don’t have people who don’t pay. They’ve had such an incredible experience. Usually, the next question is, “What other games are there?” They pay happily.

Utilisation: Treat it Like an Airline

Cooney: How do you train your staff to do that? Because that’s going to be the big question, right? If an owner-operator’s there, you can do it. But how do you train staff? You’re an enterprise. How many employees do you guys have?

Blaise: We have over 3,000.

Cooney: Three thousand employees. How do you train staff to do that? That feels like high-level, next-level stuff.

Blaise: It actually isn’t. It’s not as difficult as people make it.

First of all, you need general managers or venue managers who are aligned. What most operators miss is setting what we call shift management goals. Every single day counts.

As an owner, you’re paying rent. You’re paying really big labour. You’re paying for electricity. The best way to explain it is: every time you miss another session of Zero Latency, it’s like a seat on a plane.

My Chairman and founder (Michael Schreiber) said to me, “Blaise, let me teach you something. Every time we miss a round, it’s like letting a plane go off to the next city without anyone sitting in the seat.”

That’s a utilisation game.

Cooney: Great analogy.

Blaise: Nobody should be surprised by this. And how do you fix it? You set daily goals and shift goals.

Most people don’t do that. They go in blind. They take the bookings they have, they kind of suck it up, and then they talk about marketing. But the mindset actually starts with the team understanding that this is a utilisation game.

So it’s like, okay — today we’ve got $1,000 in bookings. We’re going to try to make $2,000. How are we going to do that?

Depending on your location and what you have access to, you go about filling those seats. Because as an owner, you’re paying rent and labour for every 30 minutes that clicks over.

Cooney: I remember when we opened the first Zero Latency in America at Main Event in Orlando, right around IAAPA. It was a huge bowling-centric FEC, hundreds of people inside, and they put Zero Latency all the way in the back. You could barely see it. The signage was terrible.

I had an iPad with a video on it. When nobody was playing, I’d go to the bar and show people the video. They’d say, “Oh my god, that’s amazing — where is that?”

But getting staff to do that consistently and getting management buy-in from the top down proved impossible. Main Event failed with Zero Latency because they couldn’t manage capacity utilisation or sell it inside the venue.

Blaise: Then you’ve got to bring it to the front. Because of the space and how it’s configured, if VR’s in the back, you have to create curiosity. I’d have staff wearing the goggles and the gun. I’d get them to wear face paint.

I’m not joking — my laser tag staff used to wear war paint. Any of my team watching this would be laughing. I had a venue in Brisbane where laser tag was in the back. I said, “Guys, the only way you’re going to sell this is if you intrigue the customer.”

We’d set shift and daily goals. How many times an hour are we trying to do this? What’s the goal? And offer incentives. 

We do contra deals with other companies in our area. “Sell ten extra Zero Latency sessions today, and this movie ticket’s yours.”

But none of that works without goal setting.

Cooney: And without actually asking people. The problem is we don’t ask. If we’re not willing to ask our staff, why would we expect them to ask the customers?

Blaise: Exactly. Human psychology is simple. If I say to you, “Bob, for the next three hours, can you offer every person who walks past Zero Latency the taster?” — nine times out of ten, they’ll do it…

Stay tuned for part 2 in the next edition of Inside VR, where we discuss how FunLab executes on these strategies through hiring and culture, how VR fits with laser tag, and where the future of content is heading. Until then…

Stay immersed,

Bob

PS. Happy New Year. If you meant to join LEXRA before Founding Memberships ended on Dec 31st and didn’t, you really screwed up. But I get it, the holidays are crazy. So I have extended the deadline to the end of this week. But that’s it. www.lexra.org