UN­DER THE BON­NET

The com­pany has grand plans to profit from high foot­fall lo­ca­tions by of­fer­ing vir­tual real­ity ex­pe­ri­ences

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Im­mo­tion looks to put some magic into leisure and shop­ping cen­tres

Vir­tual real­ity (VR) hasn’t been the main­stream hit with con­sumers widely pre­dicted a few years ago, de­spite equip­ment com­ing down in price and it be­ing a fas­ci­nat­ing ex­pe­ri­ence.

There are a few ob­vi­ous ex­pla­na­tions such as the tech­nol­ogy some­times caus­ing mo­tion sick­ness, the price point still be­ing too high for the mass mar­ket, and TV or on­line ad­ver­tis­ing fail­ing to give view­ers a chance to prop­erly ap­pre­ci­ate the ex­pe­ri­ence of VR and en­tice them to buy the prod­ucts.

What’s clear, how­ever, is that VR is not go­ing to be writ­ten off as a failed ex­per­i­ment. While it may not be om­nipresent in the home for some time, if at all, VR may still have a fu­ture as a leisure ex­pe­ri­ence in theme parks, shop­ping cen­tres, mu­se­ums and more. And that’s what Im­mo­tion (IMMO:AIM) is bank­ing on.

The £26m com­pany de­vel­ops con­tent to be used on a range of VR mo­tion plat­forms which also house its be­spoke con­tent man­age­ment sys­tem. These are be­ing rolled out to big leisure op­er­a­tors such as Mer­lin En­ter­tain­ments (MERL) and shop­ping cen­tres, ei­ther as stand­alone shops or booths in the mid­dle of malls owned by the likes of Ham­mer­son (HMSO) and Intu (INTU).

From an in­vest­ment per­spec­tive, Im­mo­tion is still early stage and loss-mak­ing. How­ever, chief ex­ec­u­tive Martin Hig­gin­son says its shop­ping cen­tre op­er­a­tions are all prof­itable (and ex­pand­ing).

Hig­gin­son says the £5.75m raised at the stock mar­ket list­ing will ‘last the busi­ness to prof­itabil­ity’. Stock­bro­ker WH Ire­land fore­casts maiden pre-tax profit of £0.1m in 2019, ris­ing to £2.1m in 2020.

Some of Im­mo­tion’s de­vel­op­ment plans in­clude the pro­vi­sion of a mo­tion plat­form to clients free of charge in ex­change for a rev­enue-share agree­ment. For that, the CEO says any work­ing cap­i­tal re­quire­ments might be funded through debt agree­ments rather than rais­ing new money from share­hold­ers.

THE COR­PO­RATE STRAT­EGY

Im­mo­tion cur­rently buys mo­tion plat­forms from Chi­nese man­u­fac­turer Leke and adds its own con­tent man­age­ment sys­tem, a Win­dows 10 op­er­at­ing sys­tem and head­sets from HP and Mi­crosoft.

It then feeds these VR ma­chines with con­tent de­vel­oped in-house such as ex­pe­ri­ences in­volv­ing roller­coast­ers, hor­ror sce­nar­ios, driv­ing games and un­der­wa­ter ex­plo­ration.

A di­rect-to-con­sumer propo­si­tion sees these ma­chines placed in shop­ping cen­tres, so far hav­ing a pres­ence in four sites: Bris­tol, Manch­ester, Castle­ford and Cardiff. Fur­ther lo­ca­tions

are ex­pected to be an­nounced shortly. Cus­tomers pay £5 for a five-minute ex­pe­ri­ence.

The other way in which Im­mo­tion makes money is to ei­ther sell the ma­chines out­right to a third party and earn 50p per game play as a con­tent roy­alty.

Or it strikes part­ner­ships to sup­ply a third party with a ma­chine for free and earn a share of the rev­enue each time some­one plays on the ma­chine. This model en­ables Im­mo­tion to over­come the prob­lems that of­ten come with deal­ing with large com­pa­nies where buy­ing de­ci­sions can be lengthy pro­ce­dures.

For ex­am­ple, gam­bling group

Rank (RNK) is cur­rently pi­lot­ing the ma­chines in its casi­nos and two Mer­lin-run Lego Dis­cov­ery Cen­tres in Bos­ton (US) and Manch­ester have al­ready signed up.

With the lat­ter, vis­i­tors strap on a VR head­set, sit in a pod that moves around and ex­pe­ri­ence a 2.5 minute Lego-themed race.

‘Ev­ery week we are see­ing in­creased us­age and there­fore higher rev­enue,’ says Hig­gin­son about the Mer­lin-lo­cated ma­chines. ‘We be­lieve it has added sig­nif­i­cant an­cil­lary rev­enue to the Lego cen­tres. The aim is to roll out the ma­chines across other Mer­lin sites, but noth­ing is signed yet.’

The CEO says mu­se­ums, aquar­i­ums and zoos have found it hard to in­crease foot­fall with num­bers static over the past decade. Adding a VR ma­chine is a proven way of in­creas­ing cus­tomer’s aver­age spend per head, he ar­gues, say­ing peo­ple are pre­pared to pay ex­tra for the ex­pe­ri­ence.

LOW PRIC­ING POINT

Im­mo­tion has de­lib­er­ately kept its price-point low in or­der to have mass mar­ket ap­peal. As a com­par­i­son, an­other firm called The Void is charg­ing £35 in the US for whole-body, fully im­mer­sive VR ex­pe­ri­ences based on the Ghost­busters and Star

Wars films. Hig­gin­son says the ex­pe­ri­ence is great but many fam­i­lies can’t af­ford it and those that can may only do it once a year.

He wants Im­mo­tion’s cus­tomers to come back again and again and has re­cently started leader­boards in the shop­ping cen­tres to en­cour­age com­pe­ti­tion – and it is work­ing.

The com­pany’s own costs are kept low by sweat­ing its as­set such as a ‘build once, sell mul­ti­ple times’ model. For ex­am­ple, it is de­vel­op­ing a Juras­sic ex­pe­ri­ence and can edit the fi­nal ver­sion to tailor dif­fer­ent mar­kets. This might be fo­cus­ing on the ed­u­ca­tional bits with a new voice-over for mu­se­ums, or adding in a roller­coaster and more di­nosaurs at­tack­ing the viewer if a client wants more thrills.

The CEO says the shop­ping cen­tre model is be­ing re­fined with a view­ing to sign­ing fran­chise agree­ments in the near fu­ture. Its plat­form sells for £15,000 re­tail and the sites of­ten have four ma­chines, so a to­tal cost of £80,000 when also in­clud­ing dis­plays and a till. ‘We be­lieve a fran­chisee could put a £24,000 de­posit down and earn a £50,000 to £60,000 salary.’

He says land­lords are ea­ger to have more VR pods as it brings a sense of ex­cite­ment to their shop­ping cen­tres and also gives con­sumers an­other rea­son to visit the shops.

An­a­lysts pre­dict Im­mo­tion could end 2018 with 200 mo­tion plat­forms in ac­tion, ris­ing to 1,000 next year. Hol­ly­wood stu­dios have also been sniff­ing around, want­ing to use Im­mo­tion to pro­mote cer­tain films via VR to of­fer a dif­fer­ent ex­pe­ri­ence to the cinema. Hig­gin­son says he only wants to en­ter into talks once Im­mo­tion has big­ger scale.

‘The con­ver­sa­tion would be more mean­ing­ful once we have 1,000 seats.’ By that point it could be serv­ing 60,000 ex­pe­ri­ences a day or close to half a mil­lion per week. (DC)

Sir David At­ten­bor­ough at York­shire Mu­seum

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