A Shakeout Is Underway Among VR Startups

An attendee using the Oculus Rift VR headset at an event last October. Photo by Bloomberg.

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Independent virtual reality studio Future Lighthouse was flying high last year. The Spanish startup created a VR marketing trailer for the TV show Snatch on Sony’s Crackle platform. It did a six-minute, 50-actor promotional piece for spirits brand Beefeater. Then in January, the startup announced it was shutting down.

A shakeout is underway in the VR startup world. An early flow of investments by consumer marketers and film studios, enthusiastic about experimenting with VR for marketing, has dried up. Instead, studios and venture capitalists are focusing on arcade-style VR installations at malls and movie theaters. These typically charge $30 for a half hour experience tied to a movie—like the Star Wars VR experience near Disneyland, where people wearing headsets can roam amongst Stormtroopers. That’s not a business best suited to smaller VR studios.