03/04/2019
"The Exit VR guys saw a different story unfolding, one where people would come to the technology long before the technology would come to people in their homes... What they are doing will make them the Netflix of consumer AR and VR."
Thank you Shel Israel for the excellent article featuring our co-founder, Ilya Druzhnikov.
Here you'll find the story behind our company's genesis: How our founders took a step back to analyze the skyrocketing VR industry before jumping in, the obstacles they foresaw, and the opportunities they created.
To learn more about Exit Reality's team, mission, and products, visit our website at www.exitrealityvr.com
or download our brochure: https://exitreality.docsend.com/view/si6zv8h
FULL ARTICLE:
I met Exit VR co-founder Ilya Druzhnikov on an extremely rainy night at a tech event in Pacifica. We were two of only three people who showed up, so it gave us time to talk. I learned that he and Yoni Koenig, his business partner, had devised a rare business model that promises to be lucrative and sustainable.
In 2016, at a time when both the tech and entertainment communities were going bonkers over the near-term promise of VR and AR, Ilya and Yoni decided to run a field test. They took a battered old van and converted it into a mobile VR lab. Equipped with state-of-the-industry VR gear, they would park it where people gathered in the many diverse neighborhoods of San Francisco. They would vary the price for viewing as well as the time per visit and the apps that were shown.
Like others, they encountered lots of wild enthusiasm and predictions of how immersive technologies would change everything and soon. But instead of joining the mania, they stepped back and thought about what they had seen and learned.
No Consumer Market
Unlike most VR/AR community members, they stepped back and thought about what they were seeing, and they concluded there was no consumer market for VR today and there will not be one for home entertainment for many years to come.
They saw three major obstacles:
Untried. No one wants VR until they try it, and even in tech-centric San Francisco, most people had neither the opportunity nor the desire to try on a headset. VR may grab big headlines and video clips at CES and SXSW, but there is little VR or AR to try in sources where everyday people may get access.
Price. Those who do try on headsets, love it, but the cost of quality gear remains steep for home users, easily costing more than $3,000 for hardware and software that is likely to be replaced a year from now with higher quality at a lower price.
Space. People who like VR and have the discretionary money, often don’t have the 60-100 square feet of space at home needed for moving around with a VR headset while blind to obstacles like chairs and moving pets.
These barriers may seem obvious today, but in 2016, they were not. Most predictions were for massive adoption of VR and AR in consumer technologies. Almost every consumer media program and publication was forecasting a world where headsets were at the center of digital life and the disruptor of consumer entertainment experience.
The Exit VR guys saw a different story unfolding, one where people would come to the technology long before the technology would come to people in their homes.
They elected to become a platform play and a VR channel, not unlike what cable TV companies did before streaming, and much like what Netflix is today. Instead of developing new tech or partnering on it, they would simply make it available to people looking for leisure time amusement.
The Exit VR guys turned to Family Entertainment Centers (FECs), a well-established category. There are over 700 of them in the US and EU. Additionally, there are many family hotels with entertainment arcades, shopping centers, bowling alleys, arcades, trampoline parks, rock-climbing gyms and restaurants such as Chuck E. Cheese where more revenue is derived from games than pizza. These are places where people are already accustomed to spending a few dollars a pop for a few minutes of fun.
In all, Ilya estimates there are over 40,000 such establishments in just the US alone. Each wants to keep people coming back again and again and the best way to accomplish that is to provide new experiences, particularly ones worth talking about.
Augmented and Agnostic
According to an Exit VR survey, over 60 percent of these businesses intend to install VR kiosks in the short-term future, and in that, Exit VR found its go-to-market strategy. They have created a business-to-business category they call Augmented Spaces. While it is just VR now, Ilya says that there are AR-related plans in the near future.
They say they are in the Augmented Spaces Business, which is good. I think what they are doing will make them the Netflix of consumer AR and VR. “We are absolutely agnostic to products and technologies. We want to provide the highest quality immersive experience, using equipment that most people cannot afford to install at home,” Ilya told me.
It seems to me that’s pretty smart thinking. Today, VR offers the unique thrill of walking a plank between urban skyscrapers or etching butterflies in midair on VR Tiltbrush: By the time that becomes old hat, some other software developer will have something more thrilling to replace it, and Exit VR, serving as a brand-agnostic content distributor, will replace them with whatever is new and popular. This strategy will keep partners happy because it keeps customers coming back. It also keeps revenue flowing to Exit VR as long as innovation keeps coming, which seems to give them a ramp of infinite opportunity.
Still in its first full year out of the van, the company has installs across the US, plus orders coming in from Mexico, the EU, South Asia and the Middle East. I was told the biggest challenge they face is to scale fast enough to meet demand.
It also looks like a no-brainer for entertainment center decision makers. According to Ilya, each installation is a turnkey transaction that pays for itself in about seven-months’ time.
They are eyeing several new markets for later this year. It sounded to me like Healthcare has their greatest strategic attention. Ilya talked about three types of Augmented Healthcare Spaces.
Son of a Dissident
Ilya is the Russian born son of Yuri Druzhnikov, a noted Russian dissident during the Nixon-Gorbachev era. He wrote dozens of novels that are available on Amazon in English translation. In the early 70s, the elder Druzhnikov was facing either being tossed in an insane asylum or years of hard labor in a Russian Gulag, when a peace treaty was signed and the family was allowed to emigrate to Houston, where Ilya was raised from the Age of 16 until moving to California which sounded more to his liking.
While his father wrote of a freedom that he hoped would someday happen, the son talked to me about a vision of his company becoming the great enabler of a new form of learning and communicating, one which is truly immersive.
I like people I call visionary pragmatists. I think Ilya fits that description and that Exit VR may just be a company that triggers the massive sort of adoption that technologists were seeing for immersive technologies in 2016 when the company was founded.
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https://shelisrael.com/istm-15-will-exit-vr-become-netflix-immersive-entertainment/
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