Immersive storytelling is the hottest area of innovation in entertainment right now. Movie theaters are slowly dying, and an entirely new industry is rising out of the ashes.

"There’s no place like dome…”

One Big Thing

You’re Not in Kansas Anymore

There’s No Place Like Dome

The Sphere (that huge immersive dome in Las Vegas) is reportedly negotiating with Warner Bros Studios to turn the Wizard of Oz into an 80-minute immersive experience. Estimates are it will cost $80 million to convert the original 102-minute film. 

The Sphere has become famous for hosting concerts (and being the best billboard ever.) But with artists taking the lion’s share of the box office (early estimates show U2 raking 90% of ticket revenue) it’s hard to see how a $2 billion concert hall makes financial sense. 

Between residency performances from U2, Phish, and The Eagles, the Sphere has been showing an immersive film by Darren Aronofsky called Postcards from Earth. The 55-minute movie generated over $1 million per day last quarter when it played. The average ticket costs about $150. 

With an estimated production cost of about $55 million, it’s easy to see how recorded content, where they keep 100% of the box office revenue, is a more profitable business. At $80 million in production cost with a much more compelling storyline, the Wizard of Oz would yield a relatively quick ROI. 

Go Big or Stay Home

Another large-format immersive venue, COSM, recently opened its second location in the US, announced a third coming to Atlanta, and closed a $250 million investment to expand further. COSM was formed through the 2020 acquisition of computer graphics pioneer Evans and Sutherland and several dome technology companies. In addition to providing large-format dome projection systems to museums and science centers, they’ve begun opening its own entertainment venues. 

COSM has mainly shown live sporting events in partnership with the NBA, UFC, ESPN, NBC Sports, Turner Sports, and FOX Sports. They’ve also struck original content development deals with creators like Cirque Du Soleil. 

For decades, IMAX set the standard for large-format cinema. Last quarter, premium-format screens generated 15% of the total domestic box office, doubling their share over the previous five years. Compared to COSM and Sphere, IMAX screens appear small. But consumers are certainly willing to pay top dollar for immersive entertainment. 

What does this have to do with virtual reality?

VR creates a sense of scale and immersion that can rival any screen, no matter how big. Prices have come down to the point where the return on investment for a headset and computer can be measured in weeks or months, not years. The Sphere cost $2.3 billion and has a capacity of 20,000. Cosm costs $80 million and can handle 2000. A VR headset and computer cost about $5K. 

Most locations don’t need the ability to handle 20,000 or even 2000 people at a time. There’s room for venue strategy where 50 or 100 people pay $50 for an hour-long immersive experience. 

Eclipso now operates six walkthrough VR experiences in the US and Europe with more on the way. I previewed their newest location in New York City last month. Up to 100 people can walk around a 10K square foot tracked space with VR headsets. We explored the pyramids of ancient Egypt in Horizons of Khufu. 

They also have an immersive art experience called A Night with the Impressionists. Both titles were created by Excurio in France. They recently shifted from PCVR with backpacks to standalone content running on an HTC VIVE Focus 3. The equipment cost for this 100-person “virtual theater” is under $200K. 

Tickets cost about $40 for a 45-minute experience. Capacity is well over 1000 people per day. You can do the math. 

One limitation of the current Excurio experiences is that they’re not interactive. We spent 45 minutes walking through the great pyramids but were never offered the opportunity to interact with the environment. This felt like a waste, considering that interactivity is the second strength of virtual reality, in addition to immersion.

Immersion Without Interactivity = WTF?

3.2 billion gamers worldwide have been raised on interactive, immersive entertainment. Not everything needs to be a game, but not utilizing hand tracking to offer interactivity in a VR experience seems like a huge miss, especially when you’re in it for almost an hour. 

Apple and Marvel get it. Their “What If…?” experience for the Apple Vision Pro is a masterpiece of immersive, interactive storytelling. It gives the user just enough to make them feel part of the story without overwhelming them with a sense of agency where they have to think too much. 

Univrse (disclosure: they are a current client) has been making interactive walk-through VR experiences since 2022. They’ve been primarily deployed as part of larger, immersive art and cultural experiences. Dali Cybernetic, Tutankhamun, Titanic, Pompeii, and other immersive experiences have seen more than 2 million visitors in 16 countries. The leading immersive experience operators in the world realize that free-roam virtual reality provides a climactic finish to their attractions.

This year Univrse partnered with Blanco Y Negro to create two entertainment titles, Fairy Tales and Hotel Dracula. The Univrse platform is exceptionally compact. Up to 30 people can experience immersive, interactive content in only 1000 square feet. Higher volume locations string together spaces to increase capacity. It’s the most efficient use of space of any VR attraction I have seen. Yet the virtual worlds still feel expansive and spacious. It creates the business framework where immersive, interactive storytelling experiences can finally scale to almost any size market. 

Follow the Yellow Brick Road

How many people would pay $50 for an immersive walk down the yellow brick road with the Scarecrow, Cowardly Lion, and the Tinman? Or Charlie’s Chocolate Factory? Or any one of the thousands of classic stories from the silver screen? The puzzle pieces are all on the table. Now, someone needs to pull them together. 

The only thing missing is a reliable stream of content production. For decades, cinemas relied on movie studios to provide sufficient content to drive people into theaters. The pandemic shut down production, and before it could get back up and running, a series of strikes sounded the death toll. Now, theaters cannot get enough content to warrant the number of screens.

Turning a single theater into an immersive VR experience could provide a compelling, cost-effective conversion strategy. If my math is correct, a single VR theater could generate up to 5X the revenue per square foot of a standard-screen cinema at half the capital cost. 

What Comes First?

But there’s a chicken and egg problem. Without a sufficient network of locations, someone who front-ends the content development might not break even or return their investment. Which takes us back to the Sphere. They’re over-invested to the tune of $2.3 billion. They’re too big to fail, so investing another $80 million for the Wizard of Oz is chump change. 

Movie studios don’t invest their own money into anything that isn’t a surefire hit anymore. They’re willing to license for a share of the revenue, as long as they get an upfront big enough to cover their cost of managing the project, and the risk that it could somehow damage the IP.

The venture capital community has been cold on location-based VR for a while now. The success of COSM, The Sphere, and other immersive entertainment venues may help draw investment back into the ecosystem. Or maybe it’s time for the theater companies to step up and take control of their future. 

If you’re going to IAAPA Orlando, there’s a gathering of theater executives who are interested in broadening their entertainment offerings. I’d love to hear from you if you’re interested in learning more or having a conversation about how to make this happen. VR is a part of the future of storytelling, and it’s time might finally be here.

Heading to IAAPA Orlando? Join Me at a Special VIP Event!

New Developments

[Downloadable] Theme Parks

Could HTC’s New CSI Holodeck feature in a Downloadable Theme Park?
HTC's and the Bavarian Police create a CSI holodeck, allowing investigators to recreate and analyze scenes with immersive precision. Read more

FECs and Arcades

Sandbox VR Partners with Museum of Illusions Franchisee for New Locations
Sandbox VR is teaming up with a Museum of Illusions franchisee to expand its presence, merging interactive VR entertainment with the captivating illusions experience. Read more

Watch My :84 Second Review of Warhammer: Space Marine VR from Zero Latency

Museums and Science Centers

Impressionism Comes to Life: The Orsay Museum’s 150-Year Celebration with VR
Celebrate 150 years of Impressionism at the Orsay Museum with an immersive VR experience that brings iconic art to life in a unique, interactive format. Read more

Experience the World of the Vikings in Virtual Reality: A Journey Through Time
Embark on a VR journey through Viking history, exploring Norse culture and iconic artifacts in an engaging, immersive virtual exhibit. Read more

Art, Music, and Culture

From Barcelona to the World: How One Woman Is Leading the Charge in VR Adult Entertainment
Discover how a pioneering woman from Barcelona is shaping the VR adult entertainment industry, pushing boundaries and transforming the digital experience. Read more

Travel and Tourism

Soar Above Niagara Falls: The New Virtual Paragliding Attraction
Experience the thrill of paragliding over Niagara Falls with a new VR attraction that offers breathtaking views and an adrenaline rush from a safe, virtual perspective. Read more

Want to Drive More Sales?

This newsletter is received by 10,000 people every week.

Reach the most interested and engaged VR operators.
Get More Information