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Virtual Reality, Real Revenue

Virtual Reality, Real Revenue

Ariel Shimoni, Director of VR at StartApp.com, explores the options for monetising VR content, what we can learn from mobile and the takeaway facts from existing campaigns.

 

It’s already been established by pretty much everyone that VR’s here and it’s going to stay. Now that that’s settled, it’s time to see how we can create a VR ecosystem that can grow and evolve; how can developers and content creators monetize their work?

Unless you’re one of the lucky few that managed to nab $10m in VC funding, VR publishers are facing the same challenges that emerge each time a new technology/medium/platform is introduced.

  • How do I get my product in front of millions?
  • How do I monetize my users to cover my operation costs and build a real business?
  • What do I need to do to keep my users coming back?

These three fundamental challenges have been discussed and analyzed inside and out for both the web and mobile, so when it comes to VR, we can use the knowledge gained so far to accelerate the degree to which publishers can succeed within this new technology.

So, what are the realistic options for VR publishers? Today, it’s really between paid content and integrated advertising. Let’s review each and offer some practical tips to help publishers make the right decisions for their products and their users.

 

Paid Content

Paid content is perhaps the easiest way for publishers to create a lasting business in VR – create content, choose a price tag, and then put it up for sale in one of the stores. This is the most common model in the VR world currently, with paid VR apps making up 91% of apps on the Rift store, 86% of those in the Steam VR store, and 73% in the Gear VR store.

Prices on Rift and Vive are higher than their mobile counterparts.

In VR, there’s a much larger variety of pricing options compared to pay-per-download apps on mobile. In this table, you can see that prices for the Vive and the Rift are similar, while Gear VR clearly showcases far lower prices. When determining a price point for your VR title, take these averages into account as your starting point while factoring in the value your app will provide for users and your overall sales goals.

Will paid content be a valid business model for VR? Time will tell. There’s very little concrete sales data available (which usually means numbers are small), but most likely, the paid model will work for top-tier, triple-A titles designed for high-end VR rigs similar to what we see with game consoles today. However, for lower-end, mobile-based VR, the paid model is not likely to be a sustainable one, especially since mobile audiences are used to receiving top content for free.

 

Advertising

Mobile VR, which is likely to hold the large percent of active VR users, will most likely rely on advertising to generate real revenue for developers. Though it may not be the flashiest or most exciting addition to virtual reality, ads have become a part of every major, mass-market technological revolution we’ve witnessed in the past few decades.

It’s an ecosystem we see working very well online and on mobile and there’s no reason it can’t be modified into VR as well. In VR, advertisers have the opportunity to expose the user to the brand message and generate awareness in a completely new way. For publishers, high-quality advertising can generate enough revenue to make it worth their while.

By being smart and pro-active regarding user expectations, ads can be integrated into VR environments and actually deliver a great experience for users. Below are a few things that both advertisers and publishers need to keep in mind when integrating ads within VR.

 

Let Users Trigger The Ad Experience On Their Own

This way, the user controls the experience and has the ability to choose whether to consume an ad. This will also present a good opportunity for the super popular ‘rewarded ads’ as a way to encourage the user to engage. The way to create the ad trigger is really up to you, but it works well if you can make it feel native for your app.

Check out this video from a campaign we recently ran:

If you choose this method of ad integration, make sure the user can see and easily interact with the ad. It’s important to note that while this is a very user-friendly ad integration strategy, it will most likely not maximize your potential revenue.

For reaching maximum revenues, you will need to go with a more ‘classic’ integration of ads, like how the interstitial in standard mobile apps is used. If you choose this method, make sure the user is aware that they are moving between content and advertising, and always make sure there is no abrupt interruption of the user experience. A slow fade-to-ad or a pop up note explaining an ad will play, can make this a far more pleasant experience.

 

What Not To Do

Quite a few VR apps on mobile have tried integrating standard 2D banners into the VR experience. This is highly distracting for the user and doesn’t really translate into worthwhile revenue. It’s a lose-lose situation for both the user and the publisher in the long term.

2D banners in VR are not a good idea.

Existing Campaigns

Last, for brands and agencies creating these VR ads and 360 videos, here are a few takeaways from the analytics we extracted during campaigns we ran this past year, where we found that viewers spend the majority of their time in the front and right side of the ad scene. Around 60% of their time is spent there, and the rest is divided between the top, bottom, back and left. So remember to place your message, and anything you wish the user to view and remember in those parts, and not the left or bottom, where they will spend around 7% of the time.

The future holds so many more opportunities for growth for VR publishers, and not only from the two monetization models discussed above. As the VR audience grows, the industry will be able to support larger-scale companies who can begin to fold in in-app purchasing capabilities as well as full-scale VR commerce, opening up even more ways to monetize content.

 

About The Author

Ariel has worked in mobile/digital marketing for the past eight years, teaming up with some of the biggest game studios and apps to figure out their business strategy and how to execute it in mobile. For the past year or so, he’s been helping connect brands, content creators and users inside immersive environments. He’s been waiting for VR for a long time and feels blessed it’s also his day job now that it’s finally here!

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