Two Bit Circus and the Challenges of Next Generation Arcades

Early concept art for Two Bit Circus

Since the introduction of consumer VR systems like Oculus and Vive, hundreds of VR-centric arcades have opened, hoping to attract punters by offering experiences that they can’t get at home because they can’t afford $1500+ VR setups and don’t have the space or custom equipment (e.g. force-feedback driving seats).

Some of these next-generation arcades are more than a few Vive headsets in a shop; they might have lots of expensive custom equipment, or even custom-made VR games that you can’t buy as a consumer. Two Bit Circus, a “micro-amusement park” opening in LA next month, combines VR with escape rooms with carnival games to reach the very highest-end of this trend. Supposedly, the entire experience will be united by a meta-game, discoverable with rabbit-holes like a secret payphone in the arcade, that has an overarching narrative. Yes, I remember when these were called ARGs myself.

The scope – and expense – of Two Bit Circus is extraordinary. It’s hard enough to make a single VR game, let alone several. And to link them with an ARG? It hasn’t been done before. That’s not to say it can’t be done, it just costs far more money than anyone is usually willing to spend.

When I tweeted out news about this, Chris Dickson (an expert in escape room games)  emailed me about Entros, a restaurant-arcade in Seattle and San Francisco from the 90s with ARGish elements. Entros folded after a few years due to inadequate sales and rising rents, and to my mind, it sadly typifies a long line of entertainment-bar-restaurant-VR-carnival hybrids that end up failing like late lamented DisneyQuest.


Why do these ventures fail?

  • High capital costs: Cutting-edge hardware isn’t cheap
  • High maintenance costs because people keep breaking things and they don’t know how to put on VR headsets
  • High R&D and design costs that can’t be amortised amongst large numbers of venues (e.g. traditional arcade games, although even these are dying out), customers (e.g. videogames), or devices (e.g. game consoles and phones)
  • Inability to charge appropriate (i.e. massive) prices or motivate people to stay in expensive hotels (i.e. Disney theme parks)
  • Technology ages quickly and becomes uncompetitive with consumer offerings, meaning either more capital spending, or your arcade getting out of date quickly. This is a reason why traditional arcades have largely vanished.
  • Hard to attract repeat visitors without acquiring or developing a lot of fresh and affordable content (in contrast to, say, cinemas). If you can’t get repeat visitors, you need a constant flow of new visitors, which is doable although usually requires a healthy marketplaces and ideally, geographic hubs (e.g. Broadway, West End). If you make something extraordinarily good, people will travel just for your venue, like people who go on pilgrimages to Michelin-starred restaurants.
  • Difficult to scale a single location, so even if you’re super popular, you will cap out.

Other new kinds of site-specific experiences like escape rooms and immersive theatre face similar challenges: escape rooms may have lower capital and R&D costs since they usually don’t feature as much technology, but staffing costs are often can be higher and of course, return visits are even lower.

Disney’s theme parks (and associated hotels, malls, etc.) are the obvious exception here in so many ways – size, visitor numbers, profitability, and so on. Disney’s parks do a lot of clever things, like: exploiting existing popular IP (e.g. Toy Story) not all of which they originally developed or owned (e.g. Star Wars, Avatar); incubating new IP (Pirates of the Caribbean, the forthcoming Jungle Cruise movie); and generally keeping visitors excited about Disney and thus continuing to buy mountains of merchandise. It’s hard to see how you equal this without really high-quality and popular IP, not to mention skilled designers and engineers (“Imagineers”).

Big isn’t always better. Not every restauranteur should aspire to become McDonalds. But a healthy ecosystem should support everything from big chains to cheap and cheerful cafes and eye-wateringly expensive Michelin starred restaurants. What’s important is that there is room for everything, and that enterprises of all sizes can theoretically be sustainable – even if most restaurants do, in fact, go bust.

Possible Solutions

Use withered technology to reduce capital costs. Maybe VR isn’t the answer to these kinds of arcades and immersive experiences! Nintendo is great teacher in this regard, as is the old-school Exploratorium.

Similarly, use the real world as your venue. The Headlands Gamble uses the North Bay in California as its backdrop; Fire Hazard uses London. However, the lack of control and ownership over the venue results in higher risk and introduces logistical challenges (e.g. accessibility, bad weather, more time required to get around) and can impose a cap on visitor numbers.

Increase prices. Punchdrunk, Disney, and The Headlands Gamble ($600-$1800 for two days!) show how high you can go, providing you can prove value. I personally have an instinctive aversion to very high prices as I want the things I make to have a wide audience, but it’s a perfectly legitimate route, especially if you’re still developing the core technology and proving your concept. However, rich people’s taste for human interaction can mean that you never end up automating anything.

Use established IP to reduce marketing costs, and potentially content development costs. Secret Cinema and The Crystal Maze have done this to apparent success. However: you lose creative control, it cuts into your margin (it’s entirely possible you have no margin left, if you have no leverage), and the demands of the IP can compromise the overall experience (I’ve heard that strict adherence to Harry Potter canon has hurt more than one HP videogame; then there’s “we need you to tie this game to the upcoming movie, but we can’t get you the script until too late, and you can’t talk about the events of the movie”.) If you’re unlucky, you’ll end up making free marketing experiences and “brand activations” for shows like Westworld. It makes for good headlines but are the entirely wrong way to make a self-sustaining business with a product that people will pay for. Believe me: I’ve lived it.

Be a non-profit so you can win grant money and donations, and justify paying your staff less money – or none at all, since you can get volunteers. Yes, I’m talking about Meow Wolf. Non-profits typically suffer from lack of access to capital, though, slowing growth.

Sell extra stuff like merchandise, hotel rooms, books, etc.

Get repeat visitors. Everyone claims they’re trying to do this and I have seen little evidence of success. It may be that it’s completely incompatible with the current design of escape rooms and immersive theatre. Learning from videogames is essential.

Reduce tech and capital costs by using off-the-shelf hardware and, importantly, software. Various companies are trying to build VR or real-world experiential platforms to make it easier to  this kind of market, but most of them don’t have much money and seem singularly unwilling to share a reasonable (i.e. very high) amount of revenue with the creatives who, after all, are taking the vast majority of risk in setting up these venues and making new experiences. Platforms work best when cost of development is low compared to potential income. Witness Unity/Unreal or YouTube and Twitch. But potential income for location-specific entertainment is far lower than that of purely digital content that can be global; and that has lower capital costs.

Evidently, I don’t have very detailed solutions to these challenges yet, although I remain very interested and I have a few brewing in the back of my mind. I’ll finish by saying that the rumoured popularity of puzzle box subscriptions like Hunt A Killer (the name is both awful and yet brilliant) is telling. They have repeat customers, low capital costs, and it’s all done with ‘withered technology’.

Having tried a few out, I am not impressed by overall quality and not convinced of their longevity or broad popularity, but they hold a lot of promise.

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